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Unemployment Rate and GDP Prediction Using Support Vector
Unemployment Rate and GDP Prediction Using Support Vector
Unemployment Rate and GDP Prediction Using Support Vector
Regression
Ezgi Deniz Ülker Sadık Ülker
Computer Engineering Department Electrical and Electronics Engineering Department
European University of Lefke European University of Lefke
Gemikonagi Mersin 10 Turkey Gemikonagi Mersin 10 Turkey
eulker@eul.edu.tr sulker@eul.edu.tr
1.2 Prediction in GDP ways: namely, make a prediction using just the OECD total
unemployment data (unemployment-total), and the second way
Similar to the prediction of unemployment rate, prediction in
make an observation using four different countries data as the
gross domestic product (GDP) is also very difficult task and has
independent variables (unemployment-countries). In Fig. 1 we can
many uncertainties underlying. One of the early works for euro
see the effect of mapping with different kernels on our test data.
area GDP prediction was done by Rünstler and Sedillot in 2003
using monthly data [9]. Later, Angelini et al. repeated a similar
goal but by using regression [10]. Olej and Krupka used Takagi- 9
Sugeno fuzzy interference systems for the prediction of gross 8
domestic product [11]. Sozen and Arcaklioglu used GDP as an
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results were obtained for support vector regression with general
regression and time-series prediction applications [15]. The basic
idea of support vector regression technique can be thought of
Figure 1: Prediction of OECD Unemployment Rate for OECD
using a set of training data, which using a kernel function can be
countries 2005-2018 (unemployment-total)
mapped into other spaces so that separation of data or regression
can be done properly. The description of the algorithm can be
As it can be observed the modeling was not very successful for
found in Welling’s research article [16] and a simple tutorial can all the kernels. In fact, only radial kernel indicated some sort of
be found in Smola and Schölkopf’s work [17]. Xiang-rong et al.
similarity to the actual data.
proposed a multi-kernel support vector regression with multiple Next a study was conducted to observe the difference of using
kernel learning mechanism in economic forecasting [18]. A
four different countries unemployment rates (unemployment data
hybrid forecasting model for forecasting currency exchange was for United States, Norway, Spain and Korea) in predicting the
suggested by Lin [19]. In their work, empirical mode
overall unemployment rate in OECD. In labeling we called this
decomposition and least squares support vector regression was case ‘unemployment-countries’. The response in this case is
used. Le-an used a least squares proximal support vector
shown in Fig. 2.
regression to obtain E-commerce credit risk early-warning [20].
9
3 Analysis 8.5
In this work, our aim was to perform analysis using the artificial 8
Unemployment Rate (%)
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2018
Next the similar analysis was performed but this time using the Table 2: Use of different kernels in GDP prediction
GDP values of the countries: Korea, Norway, Spain and United
States. So we can consider this analysis as a regression problem Average Error Average Error Average
with four independent variables. The result is shown in Figure 5. (14 Points, (24 Points, Error (24
GDP- GDP-total) Points,
60000
countries) GDP-
countries)
Linear 135.475 561.8724 218.7929
50000 Kernel
Polynomial 1879.08 2611.337 2666.232
Kernel
40000 Sigmoid 1574.581 4577.824 4417.613
GDP (24 year)
Kernel
Radial 364.3908 551.3671 190.0276
30000
Kernel
OECD GDP
20000
SVR-radial
4 Conclusions
SVR-linear
In this work various analysis for the application of support vector
10000 SVR-poly regression to some economic indicators (unemployment rate and
GDP) were studied. It was clearly shown that with the support
SVR-sigm
vector regression that was performed even with few data points
0 the actual behavior of the unemployment rate and GDP can be
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2017
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[9] G Rünstler, F Sedillot (2003). Short-term estimates of euro are real GDP by
means of a monthly data. ECN Working Paper, No. 276, European Centrral
Bank, Frankfurt.
[10] E Angelini, G Camba-Mendez, D. Giannone, L. Reichlin, G. Rünstler (2011).
Short-term forecasts of euro area GDP growth. The Econometrics Journal
14(1), C25-C44. DOI: 10.1111/j.1368-423X.2010.00328.x
[11] V Olej, J Krupka (2005). Prediction of gross domestic product development by
Takagi-Sugeno fuzzy inference systems. Proceedings of the 2005 5th
International Conference on Intelligent Systems Design and Applications.
[12] A Sözen, E Arcaklioglu (2007). Prediction of net energy consumption based on
economic indicators (GNP and GDP) in Turkey. Energy Policy 35, 4981-4992.
DOI:10.1016/j.enpol.2007.04.029
[13] A Baffigi, R Golinelli, G Parigi (2004). Bridge models to forecast the euro area
GDP. International Journal of Forecasting 20, 447-460. DOI:10.1016/S0169-
2070(03)00067-0
[14] H Drucker, JC Burges, L Kaufman, AJ Smola, and V Vapnik (1997). Support
vector regression machines. In Advances in neural information processing
systems, 155-161. DOI:
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(1997). Predicting time series with support vector machines. In: W Gerstner, A
Germond, M Hasler, JD Nicoud (eds) Artificial Neural Networks –ICANN’97.
Lecture Notes in Computer Science, vol. 1329, Springer, Berlin, Heidelberg.
DOI:10.1007/BFb0020283.
[16] Welling, M. (2004). Support vector regression. Department of Computer
Science, University of Toronto, Toronto (Canada).
[17] AJ Smola, B. Schölkopf (2004). A tutorial on support vector regression.
Statistics and Computing 14, 199-222.
DOI:10.1023/B:STCO.0000035301.49549.
[18] Z Xiang-rong, H Long-ying, W Zhi-sheng (2010). Multiple kernel support
vector regression for economic forecasting. In 2010 International Conference
on Management Science & Engineering 17th Annual Conference Proceedings.
DOI: 10.1109/ICMSE.2010.5719795
[19] C-S Lin, S-H Chiu, T-Y Lin (2012). Empirical mode decomposition-based least
squares support vector regression for foreign exchange fate forecasting.
Economic Modelling, vol.29, issue 6, 2583-2590. DOI:
10.1016/j.econmod.2012.07.018.
[20] YU Le-an (2012). E-commerce credit risk early-warning with a least squares
proximal support vector regression model. Systems Engineering – Theory &
Practice, 2012-03.