A Pragmatic Model for Monetary Policy Analysis I: The Case of Pakistan

Shahzad Ahmad () and Farooq Pasha

SBP Research Bulletin, 2015, vol. 11, 1-42

Abstract: We present the application of Forecasting and Policy Analysis System (FPAS) for monetary policy analysis in Pakistan. FPAS is a customized Dynamic Stochastic General-Equilibrium model widely used for monetary policy analysis. Over an eight-quarter horizon and in normal times, the inflation forecasting accuracy of the model is found to be superior to combinations of econometric models; while in more turbulent times the FPAS model compares at least as favorably to the alternatives. The model offers various scenario building tools to check robustness of the baseline forecasts.

Keywords: Monetary policy; DSGE model; Pakistan (search for similar items in EconPapers)
JEL-codes: C53 D5 E17 E5 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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