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Unique models, forecasting techniques will boost economy – Experts


The Central Bank of Nigeria, CBN,is out with a new policy to nationalise the eight rescued banks, instead of liquidating  them as previously planned, just as financial experts expressed fears that the economy may lose about N3.8 trillion depositors and shareholders funds should the apex bank liquidate affected banks.

As CBN jettisoned its initial plan, the affected banks as well as policy-makers have been advised to adopt unique models and modern forecasting techniques capable of turning round the nation’s economy.

Experts who spoke with Sunday Business expressed their views:

Financial sector operators should make use of efficient models and forecasting techniques – Dr. Kwasi Osei-Yeboah of Bank of Ghana:

Dr. Kwasi Osei-Yeboah

The use of efficient banking models and appropriate forecasting techniques would create more business opportunities for operators in the financial sector.

Also, modern scientific forecasting  methods in the financial sector should be based on sound monetary policies and economic framework capable of optimising outputs in the long-run. Such forecasts must be based on efficient statistical methods and

models well structured to enhance economic development in the financial sector and the economy at large. Appropriate forecasts could achieve two ends, such as providing values for some outcome and reducing uncertainty about the range of values that may result from future events.

Players in the financial sector should ensure the use of credible data for policy analysis and forecasting to achieve greater productivity in the economy.

We need sound system for analysing financial data – Director-General, West African Institute for Financial and Economic Management (WAIFEM), Prof. Akpan Ekpo:

Prof. Akpan Ekpo

There is need to have sound systems for acquiring, sharing and analysing economic and financial data so that policy could respond quickly to unforeseen developments and steer actions to achieve policy- objectives.

Indeed, even where sufficient data are available, policymakers should make use of econometric techniques and models for a better understanding of the economy. These techniques should support good economic analysis.

For instance, econometric models are useful in predicting the direction of economic variables and in identifying their driving factors. This helps to alert policy-makers to the possible changes in government policy that may be needed to enhance economic growth and development.

Behind each macro-economic policy prescription is a certain view of the structure of the economy and how it could respond to policy measures. The value of a model is that it has a memory and is able to keep track of the relationships among all the key variables in the economy.

This allows the models to forecast the likely response of the economy to the policy prescription in a coherent and logically consistent framework. In addition, an appreciable knowledge and understanding of economic theory is a prerequisite so that modeling does not become a mechanical exercise.

Also, at a time of heightened uncertainty in the economic environment, constructing a range of forecast may be much more useful than point predictions. Also, econometric models could reduce limitations of the human mind and obtain a more complex representation of the economy.

The initiative by WAIFEM to organise a regional course on econometric modeling and forecasting for policy analysis was to enable policy makers acquaint themselves with new forecasting techniques needed to move the economy forward.

Players in the financial sector should adopt banking models that are based on empirical facts – Dr. Johnson Asiama: Director, Macro-economic Management Department, WAIFEM:

Dr. Johnson Asiama

Adopting models based on empirical facts would reduce the level of uncertainty in the system.

To achieve this, econometric modeling and appropriate economic forecasting should be put into good use, to effectively describe economic realities as they affect changes in the industry and the entire economy.

This would enhance tangible growth and development both in the short-run and long run expectations. They are useful for testing hypothesis about economic policies and forecasting in future economic activities.


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