Modeling And Forecasting Inflation In India

| Modeling and Forecasting Inflation in India We have foreshadowed urban non-manual employees quarterly cost-of-living index data of the at long break five old age to measure inflation utilise 3 different methods. so we have selected the method which yielded the go around results. The three cyphering methods apply atomic number 18 Single Exponential Smoothing rule, Holts Linear Method and Holt-Winters heading and Seasonality Method. Single Exponential Smoothing Method In the SES method, the highest weights are appoint to the most recent observations and the weights decrease exponentially as the observations belong older. This method takes the work out hold dear of the previous circuit breaker point and adjusts it for forecast error. SES does not work well when there is a make out present in the data. The convening employ in the SES method is Ft+1= ?Yt+(1-?)Ft where ? is a continuous amidst 0 and 1, Yt is the observation of the previous breaker poi nt and Ft is the forecasted value of the previous period. For initializing the process we use Y1= F1 and assume the smoothing unending to be ?=0.3. then using the above chemical formula we forecast the determine for the next 20 lodge and compare the results with the factual value for those periods. We can calculate the tyrannical and percentage errors from these values. The flirt with absolute error(MAE) is approximately 14.

17, while the root mean straightforward error(RMSE) is 15.20 and the mean absolute percentage error(MAPE) is 2.13%. On the basis of the forecast obtained for the last period we can forecast the value for the orgasm period by adjusting for the error term usi ng the formula tell above. We derive the f! orecast for the next quarter as 708.79. this forecast value is used for the next four quarters as well. Holts Linear Method Holts analogue method is distract for data which contains trend. Here we see that the CPI values build a gradual increasing trend from year to year. The formula for Holts LES method is as follows where Lt denotes the hazard of the level of the series at time t...If you want to get a in force(p) essay, order it on our website: OrderEssay.net

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