ARIMA modelling of economic variables in the COVID-19 era: A study of the consumer price index

Abstract

In addition to being fatal to the lives of thousands of people, coronavirus disease (COVID-19) was also fatal for corporations, businesses, and the entire global economy. COVID-19 is a pandemic with a contagious medical character, and it can even be fatal for the infected person who may have severe blockage of the respiratory system. From its origin, this virus spread across the globe, infecting hundreds of people of various ages and nationalities. For future occurrences to be understood, mathematical or statistical models with the fewest errors are required. This research is based on the studies of Sahai et al. (2020) and Ribeiro et al. (2020). In this study, the autoregressive integrated moving average (ARIMA) model is used to forecast the monthly consumer price index (CPI) in Kosovo. Furthermore, ARIMA (3, 1, 2) projections revealed the potential values for monthly CPI are expected to be on the rise with related implications for Kosovo. The study suggested introducing health, political and economic policies, such as a secure political climate, incentives for indigenous industries, economic diversification, and development of healthcare facilities throughout the world. The relevance of this research lies in the mathematical treatment of this problem which has never been treated in the Kosovar environment.