The Better Policy Project

The Central Bank of Armenia will be launching the FPAS Mark II framework in January 2024. To support the launch of the new prudent risk management policy framework, the Central Bank of Armenia (CBA) and The Better Policy Project (BPP) will be hosting a high-level symposium covering the following topics:

 

• FPAS Mark II evaluation and challenges by Charles Goodhart and Lawrence Summers

• Panel discussions with central bank Governors and Deputy Governors

• Presentations by CBA staff on key elements of the FPAS Mark II framework (including organizational structure, communications and transparency framework, human capital approach, etc.)

• Contributions from CBA and BPP senior advisors Robert Ford, Hamid Faruqee, Ioannis Halikias, and others.

 

The key elements of the FPAS Mark II framework are summarized in the attached introduction to the forthcoming book covering the theory and practice of FPAS Mark II.

 

The CBMM Workshops were started at the Reserve Bank of New Zealand (RBNZ) in 1998 after they had developed a model-based foreword-looking forecasting and policy analysis system (FPAS) to support their flexible inflation targeting regime. Since 1998, every year it has moved from central bank to central bank with the purpose of connecting central bank modeling efforts with research in academia. 

 

The title of the first workshop was “Monetary Policy Under Uncertainty”.  It was the time of the inflation-targeting pioneers.  In addition, at the beginning of 1990s, the Bank of Canada developed solution methods for solving a class of useful nonlinear models with plausible representations of the monetary policy transmission mechanism. The methods were incorporated in the Bank’s Quarterly Projection Model (QPM). The RBNZ, with help from the Canadians, then implemented this approach to support  its novel Inflation Targeting regime, launching what it is known today as the FPAS. Publicly-disclosed forecasts used to inform and explain decisions taken in pursuit of clear policy targets, became the gold standard for monetary policy.

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With the development of the FPAS Mark II—which evolves the FPAS Mark I framework to better deal with uncertainties and nonlinearities—we have taken the opportunity to revisit the format of these conferences. From 2023 the CBMMW will be held on a quarterly basis, at the end of the second week of the first month of each quarter, alternating between Dilijan, Armenia and Carcavelos, Portugal. Given the successful experience of organizing the CBMMW during the pandemic, we emphasize that the workshops will continue to be hybrid (participants can join either online or in-person). We would of course welcome you to join us in Dilijan in January and July or in Carcavelos in April and October.

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The inaugural quarterly conference in January, as well as later conferences in April and October, will feature a series of invited and keynote presentations. The flagship annual conference in July will feature a combination of both submitted papers and invited/keynote presentations. The advantages of this approach are that we can spend much more time on each paper in the quarterly workshops that involve invited papers. The idea is to choose the invited papers partly from the pool of papers that have been submitted at the annual flagship workshop, which over the past few years, has averaged somewhere between 60-100 presentations. We will continue to improve the paper selection process by creating a better approach for determining the scientific committee. The other advantage is that researchers will have more opportunity to present their work, as their research progresses into the final publication stage.