Understanding inflation trends in Israel: A univariate approach

NYONI, THABANI (2019): Understanding inflation trends in Israel: A univariate approach.

Abstract

This paper uses annual time series data on inflation in Israel from 1960 to 2017, to model and forecast inflation using the Box – Jenkins ARIMA technique. Diagnostic tests indicate that Q is I (1). The study presents the ARIMA (1, 1, 2) model for predicting inflation in Israel. The diagnostic tests further show that the presented parsimonious model is stable and acceptable for predicting inflation in Israel. The results of the study apparently show that inflation in Israel is likely to be hovering around 1.6% over the next decade. Basically, the study encourages the Bank of Israel to continue being transparent and independent in order to retain credibility and boost its ability to engineer successful macroeconomic policy actions.

• Item Type: MPRA Paper
• Language: English
• Keywords: Forecasting; Inflation
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods ; Simulation Methods; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E37 - Forecasting and Simulation: Models and Applications; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E47 - Forecasting and Simulation: Models and Applications

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