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Regional unemployment forecasts with spatial interdependencies

  • Schanne, N.
  • Wapler, R.
  • Weyh, A.

We forecast unemployment levels for the 176 German labour-market districts on a monthly basis. Because of their small sizes, strong spatial interdependencies exist between these regional units. To account for these, as well as for the heterogeneity in the regional development over time, we apply different versions of a univariate spatial GVAR model. When comparing the forecast precision with that of univariate time series methods, we find that the spatial model does indeed perform better, or at least as well. Hence, the spatial GVAR model provides an alternative or complementary approach to commonly used methods in regional forecasting which do not consider regional interdependencies.

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Article provided by Elsevier in its journal International Journal of Forecasting.

Volume (Year): 26 (2010)
Issue (Month): 4 (October)
Pages: 908-926

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Handle: RePEc:eee:intfor:v:26:y::i:4:p:908-926
Contact details of provider: Web page: http://www.elsevier.com/locate/ijforecast

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