and forecasting which can answer all potential policy questions. therefore, central banks need multiple models for policy advice. some macroeconomic and econometric models which central banks use nowadays include univariate, reduced - form, simultaneous equation, state - space, semi - structural, bayesian methods and dynamic stochastic general equilibrium models ( dsge models ). let me now turn to the evolution of the macroeconomic models at central banks over the years. macroeconomic modeling experienced a paradigm shift after the general acceptance of the lucas critique and the emergence of rational expectations theory. this in effect rendered simultaneous equation models, which were popular until the late seventies, obsolete and unleashed a revolution in the form of real business cycle ( rbc ) theory. lucas posited that as the behavior of economic agents adapts to changes in the economic structure, policy advice based on models becomes increasingly useless. to address the lucas critique, 1 / 3 bis central bankers'speeches macroeconomists came forward with models that contained stronger micro foundations. this class of models dates back to 1982 and is today classified as dsge models. in later incarnations, a wider set of distortions and a host of shocks came to play a larger role in these macroeconomic models. for instance, the incorporation of nominal frictions in rbc theory transformed these models into new keynesian dsge models. the popularity of such models among central banks has grown manifold, mainly due to their ability to explain how nominal shocks can create real impacts in the short - run. over time, these models have become workhorse policy analysis tools, especially for monetary policy advice, scenario analysis and forecasting. alongside standard micro founded dsge models, central bankers also utilize reduced - form versions of dsge models, including forecasting and policy analysis system ( fpas ) and quarterly projection models ( qpm ), for policy advice and forecasting. like dsge, these models also serve as useful tools for shock decomposition and scenario analysis. in terms of the use and advancement of macroeconomic models, the role of central bank researchers has been stellar in recent years. researchers at major central banks have developed in - house dsge models, calibrated on specific characteristics in their economies. today many central banks, both in developed and emerging market economies ( emes ) have developed their own models and central banks in saarc countries are no exception. central banks in some of the saarc countries have invested heavily in human resources and computational tools for

. institutions such as gik, ned, uet, nust, fast, etc. should not only organize refresher technical courses for the executives working in engineering profession but also hold management courses for the middle level managers of various companies. there is an acute shortage of project management skills in this country. to begin with, our engineering universities can bring in foreign trainers or institutions as partners and then gradually build up their own capacity. continuous collaboration with leading universities such as caltech, georgia tech, etc. would be the best way to value addition of our engineering professionals. at the last stage, the finished product rising from within the organization or recruited from outside should remain engaged in learning and skill upgradation. at this stage, the job content emphasizes less of technical skills but more of leadership and managerial skills. we do not realize how much difference a good manager can make to the efficiency and productivity of an organization. but our senior managers feel they have reached the nirvana, they know everything and nobody can teach anything to them anymore. i believe they are sadly mistaken as they do not realize how much they are missing in terms of their own personal and professional growth. management development programs both at our universities and institutes of higher learning and at foreign institutes should be encouraged and made an integral part of their career management. the model that i have laid out is nothing new or spectacular. the different elements of this model do exist in bits and pieces and have been applied in varying intensity across many companies in pakistan. i have mostly relied upon the examples of banking industry as i am more familiar with the developments there. i do not know very much about the other sectors and i am sure a lot must be happening there. if it is not happening, then i will urge the universities, institutes, industry associations to work together and test this model, adapt it and apply it widely and in a systematic say. i am confident that the skill shortages, which we are observing today in pakistan, will not only disappear domestically but we will become the conduit for supplying these skills to other countries and a magnet for outsourcing business.