GDP Modelling and Forecasting Using ARIMA. An Empirical Assessment for Innovative Economy Formation

This article discusses the construction of a forecast model of the gross domestic product for the Republic of Moldova. The theme arises from a first need to redefine, economic growth in the context of increasing globalization but also the complexity of commercial transactions. The forecasting method used is based on ARIMA each model partly emphasizing the urgent need to redefine, the economic growth in the context of the Association Agreement (AA) with the EU, which includes a Comprehensive and Comprehensive Free Trade Agreement (2014) but also future prospects of integration among the countries with an average degree of development. The technique used comes to bring novelty in the field of forecasting, as an alternative to the one with simultaneous equations and traditional VAR models. The policy and practical implications of the results are the strengths. The limits are due to the high degree of risk and uncertainty, which is due to the low degree of real convergence of the economy, but also to other factors such as the regional context, the lack of openness of the economy, the diversification of exports and services. In conclusion, the model aims not only to redefine the area of macroeconomic forecasting but also to offer a future perspective of adopting combined techniques such as the Bayesian technique, but also the scenario method. The degree of complexity arises from the adaptation and study of the chronological series 1995-2019 for the branch - information and communications, subgroup GDP, categories of resources, which themselves have specific asymmetries and nuances. The basic ARIMA equations are generally used in conjunction with three sets of assumptions regarding the formation of the gross domestic product, referring to the elasticity of aggregate demand or excess supply in the goods and labor markets. Another hypothesis concerns the rigid wage and constant prices, with an excessive supply only in the telecom market. Also, the salary is rigid, while the price level is adjusted based on the market of goods and commodities, so that the excess supply appears only in the labor market. Finally, in a third assumption, both markets are assumed to be mutually adjusting. The multipliers of fiscal and monetary policy, besides the conclusions that can be drawn about economic policy, are obviously different in these three assumptions. The article presents a synthetic model that supports the three particular sub-regimes of assumptions of a single adapted ARIMA model, namely the trajectory of a balance in the goods and services market, the labor market and the national financial system.