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Forecasting The Exchange Rate Series With Ann: The Case Of Turkey

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Author Info
Cem Kadilar () (Hacettepe University)
Muammer Simsek () (Cumhuriyet University)
Cagdas Hakan Aladag () (Hacettepe University)

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Abstract

As it is possible to model both linear and nonlinear structures in time series by using Artificial Neural Network (ANN), it is suitable to apply this method to the chaotic series having nonlinear component. Therefore, in this study, we propose to employ ANN method for high volatility Turkish TL/US dollar exchange rate series and the results show that ANN method has the best forecasting accuracy with respect to time series models, such as seasonal ARIMA and ARCH models. The suggestions about the details of the usage of ANN method are also made for the exchange rate of Turkey.

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File URL: http://eidergisi.istanbul.edu.tr/sayi9/iueis9m2.pdf
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Publisher Info
Article provided by Department of Econometrics, Faculty of Economics, Istanbul University in its journal Istanbul University Econometrics and Statistics e-Journal.

Volume (Year): 9 (2009)
Issue (Month): 1 (May)
Pages: 17-29
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Handle: RePEc:ist:ancoec:v:9:y:2009:i:1:p:17-29

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Related research
Keywords: Activation function; ARIMA; ARCH; Artificial neural network; Chaotic series; Exchange rate; Forecasting; Time series;

Other versions of this item:

Find related papers by JEL classification:
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions
C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Other Model Applications
F31 - International Economics - - International Finance - - - Foreign Exchange
G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting

References listed on IDEAS
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  1. Panda, Chakradhara & Narasimhan, V., 2007. "Forecasting exchange rate better with artificial neural network," Journal of Policy Modeling, Elsevier, vol. 29(2), pages 227-236. [Downloadable!] (restricted)
  2. Qi, Min & Zhang, Guoqiang Peter, 2001. "An investigation of model selection criteria for neural network time series forecasting," European Journal of Operational Research, Elsevier, vol. 132(3), pages 666-680, August. [Downloadable!] (restricted)
  3. Zhang, Gioqinang & Hu, Michael Y., 1998. "Neural network forecasting of the British Pound/US Dollar exchange rate," Omega, Elsevier, vol. 26(4), pages 495-506, August. [Downloadable!] (restricted)
  4. Meese, Richard A. & Rogoff, Kenneth, 1983. "Empirical exchange rate models of the seventies : Do they fit out of sample?," Journal of International Economics, Elsevier, vol. 14(1-2), pages 3-24, February. [Downloadable!] (restricted)
  5. Zhang, Guoqiang & Eddy Patuwo, B. & Y. Hu, Michael, 1998. "Forecasting with artificial neural networks:: The state of the art," International Journal of Forecasting, Elsevier, vol. 14(1), pages 35-62, March. [Downloadable!] (restricted)
  6. Hsieh, David A, 1989. "Modeling Heteroscedasticity in Daily Foreign-Exchange Rates," Journal of Business & Economic Statistics, American Statistical Association, vol. 7(3), pages 307-17, July.
  7. Franses, Philip Hans & Van Homelen, Paul, 1998. "On Forecasting Exchange Rates Using Neural Networks," Applied Financial Economics, Taylor and Francis Journals, vol. 8(6), pages 589-96, December. [Downloadable!] (restricted)
    Other versions:
  8. Plasmans, Joseph & Verkooijen, William & Daniels, Hennie, 1998. "Estimating Structural Exchange Rate Models by Artificial Neural Networks," Applied Financial Economics, Taylor and Francis Journals, vol. 8(5), pages 541-51, October. [Downloadable!] (restricted)
  9. Parikh, Ashok & Williams, Geoffrey, 1998. "Modelling Real Exchange Rate Behaviour: A Cross-Country Study," Applied Financial Economics, Taylor and Francis Journals, vol. 8(6), pages 577-87, December. [Downloadable!] (restricted)
  10. Meese, Richard A & Rose, Andrew K, 1990. "Nonlinear, Nonparametric, Nonessential Exchange Rate Estimation," American Economic Review, American Economic Association, vol. 80(2), pages 192-96, May. [Downloadable!] (restricted)
  11. Ma, Yue & Kanas, Angelos, 2000. "Testing for a nonlinear relationship among fundamentals and exchange rates in the ERM," Journal of International Money and Finance, Elsevier, vol. 19(1), pages 135-152, February. [Downloadable!] (restricted)
  12. Cornell, Bradford, 1977. "Spot rates, forward rates and exchange market efficiency," Journal of Financial Economics, Elsevier, vol. 5(1), pages 55-65, August. [Downloadable!] (restricted)
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This page was last updated on 2009-11-22.


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