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Development of an Individual-Tree Basal Area Increment Model using a Linear Mixed-Effects Approach
Published on: July 3, 2020
Enhancing forecast accuracy using combination methods for the hierarchical time series approach.
1Department of Statistics, Mathematics, and Insurance, Faculty of Commerce, Port Said University, Port Fouad, Port Said, Egypt.
Combining hierarchical time series forecasts using the AC method significantly improves accuracy for international trade predictions compared to individual models. This enhances planning for trade balance and production policies.
Area of Science:
- Econometrics
- Time Series Analysis
- International Trade
Background:
- Accurate forecasting of international trade is crucial for economic planning and policy development.
- Traditional forecasting models often struggle with the hierarchical nature of trade data (e.g., aggregate vs. disaggregate levels).
- Hierarchical time series methods offer a structured approach to improve forecast accuracy by considering relationships across different data aggregation levels.
Purpose of the Study:
- To evaluate if combining forecasts from different models within a hierarchical structure improves accuracy over individual models.
- To compare various hierarchical forecasting approaches, including bottom-up, top-down, and optimal combination methods.
- To identify the most effective forecasting and combining methods for international trade data, specifically for Egypt.
Main Methods:
- Employed Autoregressive Moving Average (ARIMA) and Exponential Smoothing (ETS) models for forecasting at different hierarchy levels.
- Utilized hierarchical forecasting approaches: bottom-up, top-down, and Minimum Trace Sample estimator (MinT-Sample).
- Combined forecasts from the best-performing individual hierarchical methods (MinT-Sample and bottom-up with ARIMA) using five different combination techniques.
Main Results:
- The ARIMA model with MinT-Sample and bottom-up approaches demonstrated superior predictive performance.
- The Average Combination (AC) method proved superior to other combining methods.
- Forecasts generated by combining models using the AC method were more accurate than individual models at the aggregate (level zero) and disaggregate (level one) trade levels.
Conclusions:
- Combining forecasts through hierarchical time series analysis significantly enhances the accuracy of import and export predictions.
- Accurate trade forecasts can inform strategic planning for improving trade balance and optimizing production policies.
- Recommends the adoption of hierarchical forecasting methods in international trade for improved precision and policy guidance.

