Quarterly Projection Model for the National Bank of Rwanda
This paper documents the projection model at the core of the Forecasting and Policy Analysis System at the National Bank of Rwanda
Abstract
National Bank of Rwanda (BNR) modernized monetary policy and transited to the price-based policy framework in January 2019. The Forecasting and Policy Analysis System (FPAS) is the cornerstone for the new forward-looking framework, which mobilizes and organizes resources and sets processes for regular forecasting rounds. The core of this system is a structural macroeconomic model for macroeconomic analysis and projections to support the BNR staff’s policy recommendations to the monetary policy committee. This paper documents the quarterly projection model (QPM) at the core of the FPAS at the BNR. The model is an extension of the canonical structure in Berg et al (2006) to reflect specifics of the interest-rate-based policy framework with a managed exchange rate, the effect of agricultural sector and harvests on prices, and the role of fiscal policies and aid flows.
This work is part of the ‘Macroeconomics in Low-income countries’ programme.
Citation
Jan Vlcek, Mikhail Pranovich, Patrick Hitayezu, Bruno Mwenese, and Christian Nyalihama (2020) Quarterly Projection Model for the National Bank of Rwanda. IMF Working Paper No. 2020/295