Forecasting inflation in G-7 countries: an application of artificial neural network

Forecasting inflation in G-7 countries: an application of artificial neural network Purpose– The paper aims to evaluate different artificial neural network models and to suggest a suitable model for forecasting inflation in G-7 countries. Design/methodology/approach– The study applies different combinations of neural networks with hyperbolic tangent function using backpropagation learning with the steepest gradient descent technique to monthly data on Consumer Price Index (a measure of inflation) of the USA, the UK, France, Germany, Italy, Japan and Canada. Findings– Predictions of inflation based on the Consumer Price Index for all the seven countries divulged that it is expected that the rate of inflation will decline marginally in the near future. Practical implications– The results proposed in this study will be a benchmark for policy-makers, economists and practitioners to forecast inflation and design policies accordingly. Originality/value– The paper’s findings provide strong evidence for policy-makers that while constructing models for forecasting inflation, the suggested models can be used to track the future rates of inflation and, further, they can apply that model in framing policies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png foresight Emerald Publishing

Forecasting inflation in G-7 countries: an application of artificial neural network

foresight, Volume 17 (1): 11 – Mar 9, 2015

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1463-6689
DOI
10.1108/FS-09-2013-0045
Publisher site
See Article on Publisher Site

Abstract

Purpose– The paper aims to evaluate different artificial neural network models and to suggest a suitable model for forecasting inflation in G-7 countries. Design/methodology/approach– The study applies different combinations of neural networks with hyperbolic tangent function using backpropagation learning with the steepest gradient descent technique to monthly data on Consumer Price Index (a measure of inflation) of the USA, the UK, France, Germany, Italy, Japan and Canada. Findings– Predictions of inflation based on the Consumer Price Index for all the seven countries divulged that it is expected that the rate of inflation will decline marginally in the near future. Practical implications– The results proposed in this study will be a benchmark for policy-makers, economists and practitioners to forecast inflation and design policies accordingly. Originality/value– The paper’s findings provide strong evidence for policy-makers that while constructing models for forecasting inflation, the suggested models can be used to track the future rates of inflation and, further, they can apply that model in framing policies.

Journal

foresightEmerald Publishing

Published: Mar 9, 2015

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