Economic Forecast on the Basis of Linear Trend Analysis and “Bottom-up” Approach

Authors: Ingrid Majerová, Tomáš Pražák

Abstract: Prediction of economic development is very important for every country. Over time, the estimations are becoming more sophisticated and they are based on serious data supported by statistical methods. Time series analysis is often used for estimations of economic development of countries. The prediction based on development of macroeconomic indicators might be analyzed by various models. For our purpose two models– linear trend analysis and “Bottom-up” approach of the International Monetary Fund – have been chosen. We estimate economic development of Papua New Guinea using the indicators such as gross domestic product, the growth of gross domestic product, inflation, current account and budgetary balance as a percentage of gross domestic products. The aim of this article is to verify the hypothesis of differences in predictions using the model of linear trend analysis and bottom-up approach. It was found out that these two types of analyses considerably diverge in their results.

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #16

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Ingrid Majerová, Tomáš Pražák, "Economic Forecast on the Basis of Linear Trend Analysis and “Bottom-up” Approach," WSEAS Transactions on Business and Economics, vol. 12, pp. 173-185, 2015
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