The Evaluation of Global Accuracy of Romanian Inflation Rate Predictions Using Mahalanobis Distance
The Evaluation of Global Accuracy of Romanian Inflation Rate Predictions Using Mahalanobis Distance

Summary/Abstract: The purpose of this study is to emphasize the advantages of Mahalanobis distance in assessing the overall accuracy of inflation predictions in Romania when two scenarios areproposed at different times by several experts in forecasting or forecasters using data from a survey (F1, F2, F3 and F4). Mahalanobis distance evaluates accuracy by including at the same time both scenarios and it solves the problem of contradictory results given by different accuracy measures and by separate assessments of different scenarios. The own econometric model was proposed to make inflation rate forecasts for Romania, using as explanatory variables for index of consumer prices the gross domestic product, index of prices in the previous period and the inverse of unemployment rate.

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