Random coefficient state-space model: Estimation and performance in M3–M4 competitions

B-Tier
Journal: International Journal of Forecasting
Year: 2022
Volume: 38
Issue: 1
Pages: 352-366

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The random coefficient state-space model was first introduced by McKenzie and Gardner (2010). This model is a stochastic combination of simple and double exponential smoothing, a desirable feature for time-series forecasting. This paper provides a simple method to estimate the random coefficient state-space model parameters by exploiting the link between the model’s autocovariance and the Kalman filter. A simulation exercise shows that the proposed estimator has good finite-sample properties. This paper also evaluates the model’s forecasting performance in large-scale empirical applications, which is remarkable. Indeed, this model outperforms all competing (not-combined) benchmarks when using the yearly data from the M3 competition dataset. Furthermore, employing the yearly data from the M4 competition, it continues to beat its competitors, with a performance comparable to that of the Theta method. The predictive performance is assessed using both the MASE/sMAPE metrics and the Model Confidence Set procedure.

Technical Details

RePEc Handle
repec:eee:intfor:v:38:y:2022:i:1:p:352-366
Journal Field
Econometrics
Author Count
2
Added to Database
2026-01-29