Forecasting Finnish inflation with commodity indexes

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Volume Title

School of Business | Master's thesis

Date

2014

Major/Subject

Economics
Kansantaloustiede

Mcode

Degree programme

Language

en

Pages

47

Series

Abstract

We examined whether commodity index prices could improve forecasts of Finnish inflation. Inflation forecasts are made for horizons of one, three, six and twelve months, for the period January 2008 - March 2014. Forecasts from the commodity ADL models are compared to benchmarks set by comparable univariate AR models. In some cases the commodity ADL models have slightly smaller root mean squared forecast errors than their benchmark, but the improvements are not statistically significant. Data: Finnish inflation, Dow Jones-UBS and IMF commodity indexes, exchange rates Methods: AR, ADL and MA time series models

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Keywords

inflation, commodity index, forecasting, time series

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