Macroeconomic Analysis, Modeling and Forecasting (MAMF)

Macroeconomic Analysis, Modeling and Forecasting (MAMF)

• Exchange rate regimes and policies promoting economic diversification and international competitiveness.
• Macroeconomic stabilization and growth
• Development and adaptation of empirical models for policy analysis and forecasting.

A key research programme of the Institution is the Macroeconomic Forecast Modeling Initiative. The Initiative is designed to design and operationalise macroeconomic forecast model for Nigeria. This research task is being done under the Macroeconomic Analysis, Modeling and Forecasting (MAMF) Thematic Working Group of the Institution.

The modeling project that combines ‘appropriate’ frameworks for modeling that involves critical thinking on the model structure with an outreach programme that elicits and incorporates regular inputs from diverse end-user institutions and agencies. The approach is to adopt rigorous theoretical processes that incorporate recent developments in the model-building literature with current developments in the economy and use these to analyze their present as well as make projections about their future trends and impacts. Secondly, using simulations, the model will make alternative assumptions about shocks and relate their implications for the evolution of selected macroeconomic indices in the economy in a way that informs the policymaker on available options to ensure minimal negative impact of such shocks on the economy. More importantly, the current model is designed to exist as a “going concern” to meet up with the challenges of policy shifts rather than be associated with a particular regime. In this regard the current work shall be regularly updated. A major value added is that the current model is self regulatory since the output from the forecasts will be disseminated and communicated to the end users on a regular basis.

The objectives of the modeling initiative are to:

• track trends major macroeconomic indices including gross output, inflation rate, money supply, interest rate, aggregate and sectoral credit supplies, savings rate, domestic investment, balance of payments indicators (trade balance, portfolio flows, foreign direct investment, etc) and reserves (the last only under assumption of market forces);
• evaluate impact of alternative government fiscal and monetary policy programmes on the above variables and interpreting their implications for the broad macroeconomic indices, with particular reference to growth;
• evaluate impact of various modes of shocks (particularly external) on the above variables and interpret their implications for broad macroeconomic indices;
• make projections on the future values of the above variables under alternative assumptions of the behaviour of agents and use such to gauge and project direction of economic welfare;
• provide a tool for the private sector to feed macro trends into their micro decisions and have better grasp and assessment of the implications of broader economic numbers on firm level performance;
• improve networking among institutions that work on modeling to better coordinate ideas and strengthen the input of evidence into policy as well as application of evidence-based policymaking;
• positively influence government fiscal and monetary actions through providing proactive dissemination of implications of alternative action plans on growth and welfare;
• improve interaction between the academia and policy makers and thereby increase the breadth of intellectual input into policymaking; and
• improve overall appreciation and understanding of methodologies and challenges in modeling African economies among academics, organized private sector and policymakers.

The expected outputs and impacts are conceived in such a manner that they meet the needs of the present, and are sustainably serve as reference for future work in modeling of the Nigerian economy. Consequently, outputs from the project will be a mix of analytical papers that assess and make projections of trends in the macro economy and consultative meetings that bring together relevant stakeholders and end users of the products from the classroom work.