Machine learning can produce better forecasts – RBI paper

ML tends to outperform standard models, but combining forecasts is best, authors say

Neural network

The use of machine learning (ML) can produce forecasts that are more accurate than standard statistical methods, research published by the Reserve Bank of India finds.

In the working paper, authors Bhanu Pratap and Shovon Sengupta test a broad range of standard statistical forecasting techniques and several different types of ML algorithms, including decision trees and neural networks. They focus on forecasting CPI inflation and its components.

In their test, ML-based models “generally

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Central Banking? View our subscription options

Register for Central Banking

All fields are mandatory unless otherwise highlighted

This address will be used to create your account

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account