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Macroeconomic Forecasting with Large Language Models

Andrea Carriero, Davide Pettenuzzo, Shubhranshu Shekhar

arXiv 1 Jul 2024 · Econometrics · 11 citations (OpenAlex)

arXiv:2407.00890 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper presents a comparative analysis evaluating the accuracy of Large Language Models (LLMs) against traditional macro time series forecasting approaches. In recent times, LLMs have surged in popularity for forecasting due to their ability to capture intricate patterns in data and quickly adapt across very different domains. However, their effectiveness in forecasting macroeconomic time series data compared to conventional methods remains an area of interest. To address this, we conduct a rigorous evaluation of LLMs against traditional macro forecasting methods, using as common ground the FRED-MD database. Our findings provide valuable insights into the strengths and limitations of LLMs in forecasting macroeconomic time series, shedding light on their applicability in real-world scenarios

Citation extraction

63
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101
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distinct cited
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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Chan, J. C. C (2022) Asymmetric conjugate priors for large bayesian vars0.8435360%
2Banbura, M., D. Giannone, and L. Reichlin (2010) Large Bayesian vector autoregressions0.81142100%
3Das, A., W. Kong, R. Sen, and Y. Zhou (2024) A decoder-only foundation model for time-series forecasting0.81142100%
4Korobilis, D. and D. Pettenuzzo (2019) Adaptive hierarchical priors for high-dimensional vector autoregressions0.7373367%
5Ekambaram, V., A. Jati, N. H. Nguyen, P. Dayama, C. Reddy, W. M. Gif… (2024) Ttms: Fast multi-level tiny time mixers for improved zero-shot and few-shot forecasting of multivariate time series0.73732100%
6Garza, A. and M. Mergenthaler-Canseco (2023) TimeGPT-10.73732100%
7Rasul, K., A. Ashok, A. R. Williams, H. Ghonia, R. Bhagwatkar, A. Kh… (2024) Lag-llama: Towards foundation models for probabilistic time series forecasting0.73732100%
8Woo, G., C. Liu, A. Kumar, C. Xiong, S. Savarese, and D. Sahoo (2024) Unified training of universal time series forecasting transformers0.73732100%
9Carriero, A., T. E. Clark, and M. Marcellino (2019) Large Bayesian vector autoregressions with stochastic volatility and non-conjugate priors self0.64422100%
10Carriero, A., T. E. Clark, and M. Marcellino (2016) Common drifting volatility in large Bayesian VARs self0.64422100%

Showing the top 10 of 63 scored citations.

Cited by, within the corpus

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1Forecasting Realized Volatility with Time Series Foundation Models: A Comparison with Econometric Benchmarks0.84344
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3MacroCast: A Vintage-Consistent Time Series Foundation Model for Real-Time Macroeconomic Forecasting0.64441
4blackNowcasting the euro area with social media data0.40511
5LLM-Generated Counterfactual Stress Scenarios for Portfolio Risk Simulation via Hybrid Prompt-RAG Pipeline0.40511
6DeXposure-FM: A Time-series, Graph Foundation Model for Credit Exposures and Stability on Decentralised Financial Networks0.40511
7Who Saw It Coming? Historical Experience and the 2021 Inflation Forecast Failure0.40511
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