‘Combination’ forecasts can beat standard methods – RBI paper

UK inflation

Inflation forecasting has become more difficult amid high volatility and structural shifts, but combining forecasts can yield better results, research published by the Reserve Bank of India finds.

Authors Joice John, Sanjay Singh and Muneesh Kapur say factors such as exchange rate volatility, external openness, the rise of e-commerce and non-linearities in the Phillips curve “seem to have broken the traditional inflation-output relationship”. In such circumstances, it can be hard to forecast

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