The Role of Shipping in Forecasting Economic Development

95 Pages Posted: 17 Aug 2010

See all articles by Finn Marten Körner

Finn Marten Körner

ZenTra - Center for Transnational Studies; Uniper SE

Date Written: December 15, 2008

Abstract

This study proposes a link between economic development and the shipping markets which can be exploited for forecasting. Market participants anticipate the future and take actions accordingly. The resulting effects are absorbed in structural autoregressive distributed lag models and in factor models. Characteristic linkages between past and present data are found using a general-to-specific procedure to select models of lagged variables. The links suggest a long-term relationship between shipping market segments and the economy proxied by industrial production. The performance of forecasting models derived from these lags does not improve on a simple autoregressive benchmark. Nor do factor models perform well in this setup. The use of neither technique is recommendable for forecasting using shipping market variables. The established underlying relations are prime candidates for more structural forecasting models. Analysis suggests that a well-determined lag structure can improve forecasts of models with lagged shipping market variables.

Keywords: shipping markets, forecasting, time-series models, model selection, lag order determination, factor models

JEL Classification: C32, C51, C53, F17

Suggested Citation

Körner, Finn Marten and Körner, Finn Marten, The Role of Shipping in Forecasting Economic Development (December 15, 2008). Available at SSRN: https://ssrn.com/abstract=1660365 or http://dx.doi.org/10.2139/ssrn.1660365

Finn Marten Körner (Contact Author)

Uniper SE ( email )

E.ON-Platz 1
Düsseldorf, 40479
Germany

HOME PAGE: http://https://www.uniper.energy/

ZenTra - Center for Transnational Studies ( email )

Carl von Ossietzky University of Oldenburg
Ammerländer Heerstraße 138
Oldenburg, 26129
Germany

HOME PAGE: http://www.zen-tra.de

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