Bank of Zambia Governor (BoZ) Denny Kalyalya says the central bank is in the process of migrating from monetary aggregates targeting to inflation targeting.
Dr. Kalyalya said inflation targeting demands the highly specialised sets of econometric skills.
He was speaking in Lusaka today during the official opening of the Africa regional training workshop on advances in econometrics versus policy challenges.
Dr. Kalyalya said the workshop would help to enhance the local research and other institutions’ ability to address the complex economic problems methodology.
He added that the training would also help researchers to learn frontiers, research tools and disseminate their on-going research.
“A good understanding and application of econometric methods is a very useful tool for decision-making. For policy makers, a solid exposition to econometric methods combined with a plication-orientated approach provides an opportunity to formulate and implement responsive policies,” Dr. Kalyalya explained.
The Bank of Zambia has partnered with University of Zambia (UNZA), Zambia Institute for Policy Analysis (ZIPAR), University of Lusaka (UniLus) and the African Economic Research Consortium (AERC) to provide financial and logistical support for the conference.
And University of Zambia (UNZA) Acting Vice Chancellor Professor Enala Mwase said econometrics was indispensable to the modern day economists when validating economic theories, evaluating the impact of public policies and forecasting future trends.
Prof. Mwase said by incorporating knowledge from various fields of economics, statistics and mathematics-econometrics has led the way in establishing regularities in economic science.
She urged the international researchers to consider collaborating with local researchers in Zambia to increase and strengthen their analysis of economic relationships in order to help
the policy makers.
Meanwhile, in-coming Chairperson of the African Region Standing Committee and University of Birmingham Professor Victor Murinde called for the inclusive growth model to ensure that small industries were included in the growth for the communities to participate.
“If you are planning infrastructure development, for example highways, you must have feeder roads to get to the communities that are excluded from the growth. The design of policies should have an inclusive growth element,” Professor Murinde said.
He further said data was very critical as it helps to develop policies that can benefit the economy and also to understand what drives certain economies to perform better.
I think this is a good move the Central Bank will make. Though its an ongoing debate among economists, current real world economics indicate that there is increasingly little relationship between money aggregates and inflation. Central banks like the federal reserve agency having noticed this, changed their banking policy.The Organisation for Economic Co-operation and Development(OECD) report (2007),concluded that monetary aggregates “appear to have lost much of their predictive power in the 2000’s, at least so far” (p. 11).
This report sounds incomplete! The
Journalist responsible for this report is incompetent!
Yes, it is good to have a solid understanding of how to apply econometric in decision making. However, this investment is of no use if the decision makers or policy makes themselves cannot understand simple economic principles and be of good standing on a number of issues. For example we are now dealing with a government which can import wrong crude oil with no consequences for the people who have led to this catastrophe. This country what is needs the most is to address the supply side of production and not just to be consuming through loans.
Heheheheee comments are too few on this matter bane…!!!! Tiye lets talk monetary aggregates bane… I support BOZ on this one ladies and gentlemen , inflation targeting will enable central bank to focus on what is appropriately under its control as opposed to monetary aggregates that are in most cases influenced by other variables beyond the mandate of the Bank.
Lets debate bane. Inflation targeting is usually characterised by reduction in real money growth which is anti-expansionary. It has been criticized for slowing growth. Lets be mindful that inflation is a double sided sword. We need to undertake studies to establish the level of inflation that will not compromise on the much needed economic growth.
Inflation targeting favours nations that are operating at least at it full natural rate of unemploynent, I think Zambia is not yet ready 4 this policy & Africa at large, most African countrz that ve tried this policy ended up causing chaos.Zambia stll have more room for expansion. The best policies 4 Zambia is exchage rates and stability in the financial market, remember we are an importing nation and we have not industralised enough