MEFMI / IMF-ICD Collaborate on Regional Workshop on Monetary & Fiscal Policy Analysis using DSGE

In an era characterised by dynamic global and regional economic conditions, policymakers face the daunting task of crafting strategies that are not only effective but also agile enough to respond to unforeseen shocks and structural changes. Economic globalisation, technological advancements, and evolving trade dynamics have introduced complexities that demand a deeper understanding of macroeconomic interactions. Dynamic Stochastic General Equilibrium (DSGE) models, renowned for their rigor, versatility, and empirical grounding, have become indispensable tools in navigating such complexities. By incorporating theoretical insights with real-world data, these models enable policymakers to dissect macroeconomic phenomena, evaluate the short- and long-term impacts of policy decisions, and forecast economic trends with remarkable precision.

The ability of DSGE models to simulate diverse scenarios and account for variables such as labour market dynamics, fiscal policies, and external shocks makes them vital in ensuring evidence-based and forward-looking policy formulation. Given its strategic importance, building expertise in DSGE modelling is not just an asset but a necessity. It is for this reason that MEFMI in collaboration with the IMF-ICD conducted a regional workshop on Monetary and Fiscal Policy Analysis using DSGE models from 3 – 14 February 2025 in Windhoek, Namibia.

The main objective of the workshop was to equip participants with the skills necessary to use and interpret DSGE models that are commonly used in central banks and finance ministries. The workshop covered important topics such as New Keynesian (NK) and Real Business Cycle (RBC) models, labour market dynamics, fiscal policy analysis, open economy frameworks, and the incorporation of financial frictions in DSGE models. Furthermore, the workshop through its hands-on practical sessions provided invaluable opportunities to apply these concepts and techniques to real-world scenarios, enhancing the practical utility of this course. It is expected that participants will be able to use the skills gained from this workshop to describe the models and techniques that policy advisors use in analysing monetary and fiscal policy issues, be able to build a basic DSGE model from first principles using data from their country and be able to apply the DSGE model to answer various policy questions.

A total of 33 officials from 13 MEFMI member countries attended the workshop. Of the 33 participants, 7 (21%) were female while 26 (79%) were male. The workshop was facilitated by a team of resource persons from the IMF ICD, namely Mr. Daniel Baksa, Mr. Mirza Gelashvili and Mr. Franz Hamann.

Prepared by Frank Chansa.