AIAE Collaborates with the Central Bank of Nigeria on building a Macroeconomic Model of the Nigerian Economy

The African Institute for Applied Economics (AIAE) is one of three institutions invited by the Central Bank of Nigeria to collaborate with it to build a macroeconomic model of the Nigerian economy. The project, which commenced in April 2008 with an inception meeting chaired by the Governor of the Central Bank of Nigeria involves two other institutions besides the Central Bank. These are the Centre for Econometric and Allied Research (CEAR) based at the University of Ibadan and the Nigeria Institute for Social and Economic Research (NISER), Ibadan.

Aims of the Programme

The Central Bank of Nigeria, as a key policy institution and an end-user of macro models instituted this programme, structured along collaborating institutions to ensure that the model that will emanate from the process will have a life of its own, sustained by the participating institutions. Consequently, the aim is not just to build a contemporary model of the Nigerian economy, but also to institutionalize a mechanism for updating and regular use of such models. It also aims to strengthen capacity and build a critical pool of modelers both at the Central Bank and in the participating institutions.

Organization and Methodology of the Programme

Three institutions, AIAE, NISER and CEAR currently have representatives working with staff of the Central Bank on the specification, estimation and simulations of the macroeconomic model. AIAE is represented by Chukwuma Agu and Moses Oduh. The programme is designed to be interactive, incorporating inputs from other modelling experts within and outside the country. A workshop was held on the 6th of August, 2008 at the Central Bank of Nigeria Headquarters Abuja, involving different experts who critiqued the initial specifications. The team is presently working to incorporate these inputs. Such interactions are expected to continue throughout the lifetime of the model building, estimation and simulation exercises.

How the AIAE intends to use the work

The model, when completed, is expected to be domiciled in all the collaborating institutions. AIAE intends to continue to take the process further by continuously updating and improving on the model and using it to forecast broad macroeconomic aggregates. It shall also collaborate with institutions of like-mandates to continue the work of building critical mass of modelers through trainings, workshops and forecasting exercises.