TECHNICAL REPORT WRITING FPR CA#2 EXAMINATION

TECHNO INTERNATIONAL NEW TOWN

Topic Name- Composition of Linear Maps in Economic

Forecasting
Subject- Engineering Mathematics
Subject Code- BSM101
Name- Aishik Bandyopadhyay
University Roll No.- 18700123011
Stream- Computer Science and Engineering
Year- 1st
Semester- 1st
Section- A
Date of Submission- 14.01.2024

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 Contents

Serial Number Description Page Numbers

1. Abstract 3
2. Introduction 4
3. Analysis 5-7
4. Conclusion 7
5. Reference 8

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 Abstract

This report deals with the important aspect of maps in business forecasting and that is their
components, applications, and implications for models. Linear Maps form the foundation of
mathematical modeling and serve as a platform for understanding the relationship between variables
in business. The introduction gives a foundational understanding of linear maps. The follow-up
analysis delves into the application of linear maps in economic forecasting.

These maps have been shown to be valid in real-world research and demonstrate impact on forecasts
such as the effect of interest rates on GDP, and employment diversity. To keep up with the dynamic
nature of business, it is important for managers to understand and utilize the mathematical tools
available that will enable them to stay on top when dealing with advanced forecasting techniques.

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 Introduction

Citing references to previous research, the technical report touches upon numerous points in its
explanation of why linear mappings are of great importance, especially for forecasting applications.
Covering the mathematical underpinnings of linear mappings, the advantages of this method even
outweigh the costs in some cases, and implementation documentation. From this article, we attempted
to supply the reader with an encyclopedic range of information about linear mappings themselves and
their practical relevance for engineering and forecasting.

In economic forecasting, accuracy in modeling is essential for anticipating future trends and making
intelligent decisions. Accordingly, linear maps are one of the most important of mathematical
instruments that give a structured model to describe difficult relationships in economic variables with
accurate brevity. In the context of economic forecasting, this section introduces the basic concepts of
linear maps.

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 Analysis

Linear maps, denoted as T : X → Y , where ( X )∧( Y )represent vector spaces. The report presents the
mathematical foundations of linear maps, highlighting the characteristic property of their being
T ( x + y )=T ( x )+T ( y ) ,∧c·Tx=T ( cx ) .These areas provide simplicity and interpretability.

Composition of Linear Maps basically has the same linear property as of the two linear map
associated with it. Also, the matrix of the transformation is the product of the matrices of the two
original maps, signifying that the composition of linear maps is just another way of spelling out
matrix multiplication.

As follows from various cases, linear maps are integrated into forecasting models. The mathematical
representations presented in the report help to clarify their participation during time series analysis,
where economic variables are shown as T ( x t )=a 0+ a 1 x 1+a 2 x 2+…+ an. Issues related to the

interpretability of coefficients are brought out in linear regression models, represented by T ( x )=ax+ b
. In addition, linear maps are used in input-output models to show interdependencies between
economic sectors.

After mentioning difficulties including the possibility of nonlinearity, this report highlights linear
maps’ flexibility and effectiveness at improving forecast accuracy.

Case Studies

Case Study 1 : Macroeconomic Variables

By investigating the structure of linear maps in forecasting models we focus on an illustrative

example pertaining to a case involving macroeconomic variables such as GDP, inflation and
unemployment rates. The goal is to reveal how linear maps elegantly represent the dynamic
connections among such major economic indicators over time.

Suppose that X t is a vector of macroeconomic variables at time t, where in particular it’s equal to
[GD Pt , Inflatio nt , Unemploymen t t ]. We conceptualize a linear map T : R 3 → R that encapsulates
these variables:

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 [ T ( X t ) =a 0+ a1 ⋅ GD Pt + a2 ⋅ Inflationt + a3 ⋅Unemployment t ]

Here, a 0 , a 1 represent the coefficients of each variable showing quantitatively how much they
improve or worsen overall economic status.

For more clarity, let's take the example of growth in GDP over time GD Pt , which is closely
associated with inflation and unemployment. The relationship is encapsulated by the linear map, and
changes in GDP can be expressed as:

[ Δ GD Pt =T ( Δ X t ) =a1 ⋅ Δ GD P t +a 2 ⋅ Δ Inflationt +a3 ⋅ Δ Unemployment t ]

This equation explains how GDP developments Δ GD Pt are determined by current changes in

inflation ( ( Δ Inflation t ) ) and unemployment ¿, as governed by the coefficients a 1 , a2 ,∧a3 .

The challenges and considerations in utilizing linear maps for modeling extend beyond the realm of
engineering applications, encompassing various fields including economics. In the context of
economic forecasting, acknowledging these challenges is crucial for a nuanced approach to model
development.

Nonlinearity in Economic Systems:

Economic systems inherently exhibit nonlinear behavior due to the presence of intricate relationships,
feedback loops, and dynamic interactions among variables. While linear maps provide an effective
approximation for certain economic phenomena, they may fall short in capturing the full spectrum of
complexities inherent in real-world scenarios. For instance, in modeling consumer behavior, linear
maps might struggle to represent the non-linear effects of changing preferences or sudden shifts in
market dynamics. Recognizing the presence of nonlinearity is pivotal to avoid oversimplification and
ensure the accuracy of economic predictions.

Model Complexity:

Linear maps, while adept at capturing linear relationships, may encounter limitations when dealing
with highly complex economic systems. In cases where variables exhibit intricate interdependencies
that cannot be adequately represented by linear approximations, the use of more sophisticated
modeling techniques becomes imperative. Nonlinear maps, such as polynomial regression or neural
networks, offer a means to address the intricacies of complex economic relationships. These models

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can better accommodate nonlinearity, capturing nonlinear trends, sudden changes, and intricate
patterns that may escape linear representation.

In the dynamic landscape of economic forecasting, understanding the constraints and potentials of
linear maps is essential. Striking a balance between simplicity and accuracy requires a judicious
consideration of these challenges, prompting researchers and analysts to explore more advanced
modeling techniques when linear approximations prove insufficient for capturing the intricate
dynamics of economic systems.

Conclusion
In recent years, the use of linear maps in engineering forecasting models has become increasingly
prevalent. Linear maps are a mathematical tool that is used to represent a linear relationship between
two sets of data. When applied to engineering, this tool can offer a myriad of benefits that make it a
versatile and potent tool for engineers, particularly in time series analysis, regression modeling, and
control systems.

One of the primary advantages of linear maps is that they are easy to interpret. Engineers can easily
understand the relationships between different variables, and this makes it easier to make predictions
and identify trends. Additionally, linear maps can be used to model complex systems and represent
them in a simplified way, which makes it easier to analyze data and make informed decisions.

However, it is essential to acknowledge that linear maps also have their limitations. For example, they
are not suitable for modeling nonlinear relationships, and they can be sensitive to outliers in the data.
Failure to account for these limitations can lead to incorrect predictions and inaccurate modeling.

Despite these limitations, it is safe to say that linear maps have become an indispensable tool for
engineers. Their judicious application can contribute significantly to the development of pragmatic
and informed engineering models that can help solve complex problems in various industries.
Moreover, when used in conjunction with other tools and techniques, linear maps can provide a
comprehensive understanding of complex engineering systems.

In conclusion, understanding the strengths and limitations of linear maps is crucial for engineers
seeking to develop accurate and reliable forecasting models. The use of linear maps in engineering
has become a cornerstone in the realm of predictive analytics, providing a powerful tool for engineers
to navigate the dynamic intricacies of modern engineering systems. By using linear maps judiciously

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and in conjunction with other tools and techniques, engineers can develop pragmatic and informed
engineering models that can help solve complex problems in various industries.

Reference

1. https://www.statlect.com/matrix-algebra/composition-of-linear-maps#:~:text=The
%20composition%20of%20two%20or,of%20the%20two%20original%20maps.
2. https://www.youtube.com/watch?
v=On6wkamacRE&t=710s&pp=ygUsZHIuIHRyZWZvciBiYXpldHQgY29tcG9zaXRpb24gb
2YgbGluZWFyIG1hcHM%3D
3. Predicting Indian GDP with Machine Learning: A Comparison of Regression ...
4. GDP Forecasting: Machine Learning, Linear or Autoregression?
5. Writing Economics - Harvard University
6. 4.19 Matrix of a linear map ‣ Chapter 4 Linear algebra - UCL

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