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Asif Alıyev: Forecasting of Engel Curve Components with the Application of ARIMA Method
Figure 1: Forecast results of Engel Curve components between 2022-2026
Figure 1 information helps to infer that forecast results of household income, expenses
and expenses on food will inrease in line with the trend lines. But, only household
expences will go below the trend line.
CONCLUSION
In this paper Engel curve componenets are forecasted for 2022-2026 period with the
application of ARIMA method. Engel curve as an express analytical and practical tool
is effective to get some information about wellbeing and consumption patterns of
households in the country. Despite that this methodology doesn’t take into account
consumption behaviour, changes in household income, changes in quality of
consumption goods, mentalities and other factors, it is still applicable to get an overall
picture about median household consumption structure on food. Since Engel curve is
not applied to all income groups, the forecasted data correspond only to median
households in the country. ARIMA time series forecasting model is one of the widely
used econometric methods in this regard to predict average change. The obtained
results can be useful for decision-making in socio-economic sectors.
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