The Reserve Bank of India today released, on its website, a Working Paper titled “Construction of Bivariate Fan Chart from Joint Distribution” under the Reserve Bank of India Working Paper Series*. The Paper is authored by Purnima Shaw. This paper proposes a theory on construction of bivariate fan chart involving two linearly related variables and conditional fan chart for a variable given the known information on the other. These charts are particularly useful when data release of one of the variables occur with a larger lag than that of the other variable. When information on one variable is released, avoidance of error that could be committed in its prediction may help in refining the point forecasts and error distribution of the other variable which may be quite useful from the policy perspective. Numerical presentation show that error committed in prediction of one variable helped in reducing and refining the error in prediction of the other. Ajit Prasad Director Press Release: 2019-2020/1848 | |