Quarterly Projection Model for India: Key Elements and Properties

IMF Working Papers, February 13, 2017

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Quarterly Projection Model for India: Key Elements and Properties

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Bibliographic details

• Authors: Jaromir Benes, Kevin Clinton, Asish George, Pranav Gupta, Joice John, Ondrej Kamenik, Douglas Laxton, Pratik Mitra, G.V. Nadhanael, Rafael A Portillo, Hou Wang, Fan Zhang
• Published: February 13, 2017
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781475578706.001

Overview and Purpose

• Paper outlines key features of the production version of the quarterly projection model (QPM), a forward-looking open-economy gap model calibrated to represent the Indian case.
• Intended uses: generating forecasts, risk assessment, and conducting policy analysis.
• Emphasizes India-specific modeling considerations: agricultural sector importance, food prices in the inflation process, monetary policy transmission features, and implications of an endogenous credibility process for monetary policy formulation.
• Describes key properties and historical decompositions of important macroeconomic variables.

Key Model Features

• Model type: forward-looking open-economy gap model (QPM) calibrated for India.
• India-specific incorporations:
  • Importance of the agricultural sector.
  • Role of food prices in the inflation process.
  • Features of monetary policy transmission specific to India.
  • Endogenous credibility process implications for monetary policy formulation.

Analytical Outputs and Properties

• Historical decompositions of macroeconomic variables are described (no numeric decompositions provided on the page).
• Uses the model for:
  • Forecast generation.
  • Risk assessment.
  • Policy analysis and simulations.

Subjects and Keywords

• Subject: Central bank policy rate, Financial services, Food prices, Inflation, Inflation targeting, Monetary policy, Output gap, Prices, Production
• Keywords: Central bank policy rate, core inflation, food inflation, Food prices, forecasting models, Global, Inflation, inflation episodes in India, inflation expectation, inflation target, inflation targeting, interest rate, model calibration, monetary policy, monetary policy models, monetary policy rules, monetary policy simulations, Output gap, reaction function, Reserve Bank of India, transmission mechanism, WP

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