 Development of per Capita GDP Forecasting Model Using Deep Learning: Including Consumer Goods Index and Unemployment RateXiao-Shan Chen,
Min Gyeong Kim (),
Chi-Ho Lin and
Hyung Jong Na
Sustainability, 2025, vol. 17, issue 3, 1-28 Abstract: In the 21st century, the increasing complexity and uncertainty of the global economy have heightened the need for accurate economic forecasting. Per capita GDP, a critical indicator of living standards, economic growth, and productivity, plays a key role in government policy-making, corporate strategy, and investor decisions. However, predicting per capita GDP poses significant challenges due to its sensitivity to various economic and social factors. Traditional methods such as statistical analysis, regression, and time-series models have shown limitations in capturing nonlinear interactions and volatility of economic data. To address these limitations, this study develops a per capita GDP forecasting model based on deep learning, incorporating key macroeconomic variables—the Consumer Price Index (CPI) and unemployment rate (UR)—to enhance predictive accuracy. This study employs five deep-learning regression models (RNN, LSTM, GRU, TCN, and Transformer) applied to real and placebo datasets, each incorporating combinations of CPI and UR. The results demonstrate that deep learning models can effectively capture complex, nonlinear relationships in economic data, significantly improving predictive accuracy compared to traditional models. Among the models, the Transformer consistently achieves the highest R-squared and lowest error values across various metrics (MSE, RMSE, and MSLE), indicating its superior ability to model intricate economic patterns. In addition, including CPI and UR as additional predictors enhances model robustness, with the TCN and Transformer models showing particularly strong performance in capturing short-term economic fluctuations. The findings suggest that the deep learning models, especially the Transformer, offer valuable tools for policymakers and business leaders, providing reliable GDP forecasts that support economic decision-making, resource allocation, and strategic planning. Academically, this study advances the understanding of deep learning applications in economic forecasting, particularly in integrating significant macroeconomic variables for enhanced predictive performance. The developed model is a foundation for informed economic policy and strategic decisions, offering a robust and actionable framework for managing economic uncertainties. This research contributes to theoretical and applied economics, providing insights that bridge academic innovation with practical utility in economic forecasting. Keywords: per capita GDP; CPI; unemployment rate; deep learning; RNN; LSTM; GRU; TCN; transformer (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:17:y:2025:i:3:p:843-:d:1572806 Access Statistics for this article Sustainability is currently edited by Ms. Alexandra Wu More articles in Sustainability from MDPI |
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