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Discrete Dynamics in Nature and Society
Volume 2015 (2015), Article ID 858157, 14 pages
http://dx.doi.org/10.1155/2015/858157
Research Article

Mathematical Development and Evaluation of Forecasting Models for Accuracy of Inflation in Developing Countries: A Case of Vietnam

International Relations Office, Lac Hong University, No. 10 Huynh Van Nghe Street, Bien Hoa, Dong Nai 71000, Vietnam

Received 26 September 2014; Accepted 9 February 2015

Academic Editor: Ufuk Yolcu

Copyright © 2015 Nhu-Ty Nguyen and Thanh-Tuyen Tran. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Inflation is a key element of a national economy, and it is also a prominent and important issue influencing the whole economy in terms of marketing. This is a complex problem requiring a large investment of time and wisdom to attain positive results. Thus, appropriate tools for forecasting inflation variables are crucial significant for policy making. In this study, both clarified value calculation and use of a genetic algorithm to find the optimal parameters are adopted simultaneously to construct improved models: ARIMA, GM(1,1), Verhulst, DGM(1,1), and DGM(2,1) by using data of Vietnamese inflation output from January 2005 to November 2013. The MAPE, MSE, RMSE, and MAD are four criteria with which the various forecasting models results are compared. Moreover, to see whether differences exist, Friedman and Wilcoxon tests are applied. Both in-sample and out-of-sample forecast performance results show that the ARIMA model has highly accurate forecasting in Raw Materials Price (RMP) and Gold Price (GP), whereas, the calculated results of GM(1,1) and DGM(1,1) are suitable to forecast Consumer Price Index (CPI). Therefore, the ARIMA, GM(1,1), and DGM(1,1) can handle the forecast accuracy of the issue, and they are suitable in modeling and forecasting of inflation in the case of Vietnam.