Making communications land - Are they received and understood as intended? we...
US economy forecasting
1. A SIMPLE US ECONOMY
FORECASTING MODEL
Svitlana Markova
Carla Murteira
Pablo Zarate
2. IDEA
• Using past values of important macroeconomic variables as inputs, we can
predict the future state of an Economy.
• Difficulties:
• Choosing RightVariables
• Transforming them Appropiately (Non-Stationarity, non-linear Relations)
• Choosing the right model Specification
• Difficult Benchmark due to Economic Incentives
4. PIPELINE
ChooseVariables Find Data Clean andTransform
Select Appropiate
Specification
Train Model with
PastValues
Predict FutureValues
(10 Q)
5. DATA
• Source: Federal Reserve (FRED)
• Time Span: 1980-2015 (Training) 2016-2018 (Prediction)
• Time Unit: Year`s Quarter
• Variables: quarterly (averaged) and seasonally adjusted
6. VARIABLES
• Inflation: Implicit Price Deflator, Index 2012=100
• GDP: Real Gross Domestic Product in Billions of Dollars
• Wages: Mean usual weekly real earnings
• Consumption: Real Personal Consumption Expenditures in Billions of Dollars.
• Investment: Real Gross Private Domestic Investment in Billions of Dollars.
• Interest Rate: Effective Federal Funds Rate in Percent.
• Unemployment: Civilian Unemployment Rate in Percent.