For each of the following explain under what conditions a fo

For each of the following, explain under what conditions a forecast obtained using that method is likely to be more accurate than forecasts obtained using other methods.

            International Fisher effect

            Auto-regression

Solution

Forecasting using International Fischer Effect is better as it takes into consideration the interest rate of the country which is a more reliable measure when compared to inflation rate as it is changing frequently.

The advantage of auto-regression is that it is useful for application on multiple data sets and analyzing them. Moreover, it is more suitable for the markets that are inefficient.