Forecasting Market Activity and Aggregate Demand in China Using Time Series Models

Abstract

The purpose of this study was to forecast market activity and aggregate demand in China using time series models. Forecasts of market activity (MA) and aggregate demand (AD) provide insights into consumer behavior and economic trends, which are crucial for policymakers and businesses alike. In order to forecast the MA and AD in China, this study uses the time series model, especially the exponential smoothing model. Based on the increase rates of M1 and M2 money supply, respectively, and the difference in increase rates between them. These indicators are necessary to assess MA and AD and reflect changes in money liquidity and people's spending behavior. The results suggest that people will be less willing to spend and more inclined to save in the coming years. This finding suggests that MA may decline as consumers become more cautious and prioritize saving over spending. This trend could be attributed to a variety of factors, including economic uncertainty or changes in monetary policy. The implications of this research are significant because it provides a forecasting framework that can help policymakers and businesses anticipate changes in consumer demand and adjust their strategies accordingly. Understanding these trends can lead to more informed decisions in economic planning and financial forecasting.