Neural Networks and Genetic Algorithms as Forecasting Tools: A Case Study on German Regions
Environment and Planning B: Planning and Design, Vol. 35, No. 4, 2008
48 Pages Posted: 19 Sep 2010 Last revised: 9 Jul 2020
Date Written: May 16, 2006
Abstract
This paper develops and applies neural network (NN) models to forecast regional employment patterns in Germany. Computer-aided optimization tools that imitate natural biological evolution to find the solution that best fits the given case (namely, genetic algorithms, GAs) are also used to detect the best NN structure. GA techniques are compared with more ‘traditional’ techniques which require the supervision of experienced analysts. We test the performance of these techniques on a panel of 439 districts in West and East Germany. Since the West and East data sets have different time spans, the models are estimated separately for West and East Germany. The results show that the West and East NN models perform with different degrees of precision, mainly because of the different time spans of the two data sets. Automatic techniques for the choice of the NN architecture do not seem to outperform selection procedures based on the supervision of expert analysts.
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