
Forecasting Indian Macroeconomic Variables Using VAR Models 47
TABLE 2.4
One- to Twelve-Months-Ahead relative RMSE for Wholesale Price Index in-
flation rate (2007:1-2011:10).
Horizon
Model 1 2 3 4 5 6 7 8 9 10 11 12 Average
VAR1 1.04 0.97 0.96 0.84 0.69 0.66 0.65 0.63 0.71 0.68 0.68 0.77 0.77
VAR2 0.88 0.88 0.90 0.74 0.67 0.64 0.64 0.62 0.67 0.67 0.70 0.79 0.73
VAR3 0.99 0.94 0.94 0.80 0.68 0.65 0.65 0.62 0.70 0.68 0.69 0.77 0.76
BFAVAR1 0.83 0.79 0.85 0.70 0.62 0.61 0.62 0.60 0.66 0.67 0.70 0.78 0.70
BFAVAR2 0.87 0.80 0.87 0.71 0.64 0.63 0.63 0.62 0.65 0.66 0.69 0.77 0.71
BFAVAR3 0.84 0.79 0.85 0.71 0.64 0.62 0.63 0.61 0.65 0.66 0.69 0.76 0.70
BFAVAR4 ...