Quarterly Projection Model for the Bank of Ghana: Extensions and Applications

Download or read book Quarterly Projection Model for the Bank of Ghana: Extensions and Applications written by Philip Abradu-Otoo and published by International Monetary Fund. This book was released on 2024-11-15 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper documents the latest extensions of the Bank of Ghana’s Quarterly Projection Model (QPM), used regularly to produce policy analysis and forecasts in support of the Bank’s policy processes. The decomposition of GDP allows to separate the agriculture and oil sectors, driven by exogenous and international developments, from non-agriculture non-oil activities, which are more relevant from the central bank’s perspective of assessing the business cycle position. Inter-sectoral price spillovers and their role in the formation of inflation expectations are explicitly accounted, with important policy implications. Specific model applications – including impulse response functions and simulations of shocks that affect agricultural production, e.g., those caused by climate disruptions; and counterfactual simulations to evaluate recent policy choices – highlight the usefulness of the extended QPM in providing a more detailed account of the economic developments, enhance forecast coverage, and broaden its underlying narrative, thus strengthening the BOG’s forward-looking policy framework.