Forecasting with many predictors: an empirical comparison

Borradores de Economia
Número: 
643
Publicado: 
Clasificación JEL: 
C11, C15, C52, C53
Palabras clave: 
Partial least squares, Principal components, Ridge regression.

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Three methodologies of estimation of models with many predictors are implemented to forecast Colombian inflation. Two factor models, based on principal components, and partial least squares, as well as a Bayesian regression, known as Ridge regression are