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  • Forecasting in Balanced Panel data

    Hello I have data of 50 countries from 1990 to 2018. We want to forecast analysis for three specific independent and one dependent variable till 2030. Data is balanced for all variables. Please guide me if its possible in Stata? How can we do this. I have tried lot of codes, but unable to generate graphs or estimates for 2030 or till 2025. The error messege is out of range..

  • #2
    You will increase your chances of useful answer by following the FAQ on asking questions.

    First you need to add observations for those years. This describes one way to do it.
    https://www.stata.com/support/faqs/p...d-observation/

    However, since you don't have the right-hand side variables either, predict won't work. You can't predict with a model when you don't have values for the right-hand side variables. You could extrapolate these values, but why this would be any better than simply extrapolating the dependent variable I'm not sure.

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    • #3
      Thanks. Can you help me in forecasting of panel data? .

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      • #4
        Hi Umer,

        As per my limited understanding, forecasting for multiple time periods in the future is problematic not just in case of panel data but in case of time-series analysis as well. As pointed out be Phil in post #2, you would actually need forecasts of your independent variables to generate forecasts of your dependent variable. But then, if you can forecast independent variables (by using say ARIMA models or structural models), you should be able to do the same for your dependent variable as well. For instance, in time-series analysis, the standard mechanism to forecast a variable (other than structural models) is to use ARIMA models. But, ARIMA models break down when you perform forecasting for multiple periods because AR and MA terms are not available for out-of-sample periods and all you get as a forecast is the historical mean of the series as your forecast for future periods. In that sense, forecasting for multiple periods becomes an irrelevant exercise. I request you to have a look at the book below for further details:

        https://otexts.com/fpp2/

        Hope this helps!

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        • #5
          Thanks Dear Bedi...

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