Forecasting the Trend Analysis of Trade Balance of Pakistan: A Theoretical and Empirical Investigation

Sara Rafiq, Liu Hai Yun and Gulzar Ali

International Journal of Academic Research in Business and Social Sciences, 2016, vol. 6, issue 7, 188-214

Abstract: Foreign trade is indispensible for any economy because of the country's needs to import a variety of products and on the other hand to export their products to other countries for earning foreign exchange reserves. So, it is necessary to evaluate the balance of trade and examine thoroughly historical data of BoT to figure out the main reasons behind BoT deficit and to forecast BoT on its bases. This will assist in overcoming the deficit in BoT through avoiding past mistakes and planning according to the future estimation. For analysis purpose the data was taken from 1972-2015 and different econometric techniques has been used. To avoid the trend or time effect we used Holt-Winter model. To check the stationarity, ADF test was used and then ARIMA Model has been used to forecast the trade Balance of Pakistan. The results of this research study showed that the situation will become chronic in this issue seriously by the micromanagers and policy makers.

Keywords: Balance of Trade; ARIMA; Trend analysis; Holt-Winter (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijarbs:v:6:y:2016:i:7:p:188-214

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