New study finds traditional models more accurate than advanced methods in predicting inflation
The article explores different methods for predicting U.S. inflation rates by analyzing the term-spread, a financial indicator. The researchers tested two nonlinear techniques, LASSO and SVR, alongside traditional OLS regression models. They found that regardless of the method used, structural models did not perform better than autoregressive models in forecasting inflation. This suggests that term-spread models are not more accurate than autoregressive models for predicting inflation.