Annual Report 2019
CENTRAL BANK OF ARMENIA
Monetary policy implementation:
improvement and advancement
T
▪he developed and refined Forecast and Policy Analysis
System (FPAS) of the Bank secures improvement in the
quantitative and qualitative components of the forecasts and
policy analysis. The system helps the Board of the Bank to have a clear
understanding of the macroeconomic situation and make more
informed decisions about the directions of the monetary policy.
Improving the FPAS is continuous and in a longer-term
perspective it has two aspects:
Inclusion of specificities of the Armenian economy into the
current system and advancing it technically,
Improvement of the current system through transition to
the Dynamic Stochastic General Equilibrium (DSGE) model
framework.
The following activities were carried out in the framework of the
first aspect in 2019:
1.
2.
3.
The main Quarterly Forecasting Model expanded to include
the fiscal stimulus, which allows to simultaneously measure
the impact of fiscal policy on the economy and vice versa.
It allows to clearly decompose fiscal policy from other
factors among the demand influencing factors.
Historical data available in the QFM were decomposed
according to individual and grouped shocks, for example,
supply and demand shocks, domestic and external policy
and economy shocks, etc.
The reporting model of the balance of payments was built
and implemented. The latter is connected to the overall
system, which ensures that the balance of payments yields
in line with general forecasts.
ANNUAL
REPORT 2019
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