Working Paper 177 - A Macroeconometric Model for Rwanda

This paper presents a macroeconometric model of Rwanda. The modelis constructed to analyze the macroeconomic e¤ects of various policy interventions.It captures the supply constrained nature of the economy as well as its dependenceon the external sector. The individual equations of the model are estimated inARDL framework and a battery of tests are used to test the forecasting ability of themodel. The model tracks the historical data very well with the desirable propertiesof low bias and variance proportions of the Theils Inequality coe¢ cient. Two setsof simulation results are presented to show the models use for policy analysis. Theresults of the simulations are consistent with a priori theoretical expectations.