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Computational Statistics & Data Analysis
Volume 51, Issue 1, 1 November 2006, Pages 417-433
The Fuzzy Approach to Statistical Analysis
 
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doi:10.1016/j.csda.2006.04.004    How to Cite or Link Using DOI (Opens New Window)
Copyright © 2006 Elsevier B.V. All rights reserved.

Fuzzy modelling and estimation of economic relationships

David ShepherdCorresponding Author Contact Information, a, E-mail The Corresponding Author and Francis K.C. Shia

aTanaka Business School, Imperial College London, South Kensington Campus, London SW7 2AZ, UK

Available online 4 May 2006.

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Abstract

A modelling strategy based on the application of fuzzy logic is shown to provide a powerful and efficient method for the estimation of non-linear and linear economic relationships. The procedure is particularly suitable for the estimation of ill-defined systems in which there is considerable uncertainty about the nature and range of key input variables. In addition, no prior knowledge is required about the form of the underlying relationships, and trend, cyclical and irregular components of the model can all be estimated in a single pass. The potential benefits of the fuzzy logic approach are illustrated using a model of real-wage behaviour in the United States over the period 1960–1995. The results suggest that the relationships in the model are basically non-linear.

Keywords: Fuzzy logic; Economic modelling; Uncertainty; Non-linear estimation; Unemployment; Real wages

Article Outline

1. Introduction
2. Fuzzy systems theory
2.1. Fuzzy sets and fuzzy rules
2.2. The Mamdani and Sugeno models
3. Fuzzy model identification from economic data
4. An application to the real wage-unemployment relationship
4.1. A fuzzy model of the real wage-unemployment relationship
4.2. Preliminary data and estimation considerations
4.3. A linear estimate
4.4. Estimates of the fuzzy model
4.4.1. Fuzzy models with 3 membership functions
4.4.2. Fuzzy models with 6 and 9 membership functions
4.4.3. Some examples of over-fitting
5. Summary and conclusions
Acknowledgements
References













Computational Statistics & Data Analysis
Volume 51, Issue 1, 1 November 2006, Pages 417-433
The Fuzzy Approach to Statistical Analysis
 
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