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Economic Recession, Covid-19 Pandemic Outbreak — Neural Network (MLP-NN) and Random Forest (RF), Vol.11, No.2, April-June 2023

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Article in the Journal of Information Systems and Telecommunication, Vol.11, No.2, April-June 2023, pages 163-175, by authors at Brac University in Dhaka and Woosong University in South Korea, building a machine learning early warning model for economic recession caused by the COVID-19 pandemic. The abstract says the model is validated on a public database created by the National Bureau of Economic Research (NBER) covering U.S. national revenue, employment rate and workers' earnings over 239 days (1 January 2020 to 12 May 2020); the data section credits the Opportunity Insights Economic Tracker. Multi-layer Perceptron and Random Forest classifiers predict recession, and Long Short-Term Memory (LSTM) and Random Forest regressors estimate its size. The abstract reports average prediction accuracy of 90.67% and 93.67% for the LSTM and Random Forest regressors.

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An Analysis Of Covid 19 Pandemic Outbreak On Economy Using Neural Network And Random Fores

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“Economic Recession, Covid-19 Pandemic Outbreak — Neural Network (MLP-NN) and Random Forest (RF), Vol.11, No.2, April-June 2023.” Original at jist.ir. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/an-analysis-of-covid-19-pandemic-outbreak-on-economy-using-neural-network-and-random-forest/, SHA-256 a45f28c9de1c65df6b135ff0b3dd2f3e9639d169fb13091c444481a14588f446.

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 Jia Uddin
jia.uddin@wsu.ac.kr
Journal of Information Systems and Telecommunication
Vol.11, No.2, April-June 2023, 163-175
http://jist.acecr.org
ISSN 2322-1437 / EISSN:2345-2773
1
.Department of Computer Science and Engineering, Brac University, 66 Mohakhali, Dhaka-1212
2
.Artifical Intelligence and Big Data Department, Endicott College, Woosong University, Daejeon, South Korea
Received: 23 Feb 2022 / Revised: 15 Jun 2022 / Accepted: 19 Jul 2022
Abstract
The pandemic disease outbreaks are causing a significant financial crisis affecting the worldwide economy. Machine
learning techniques are urgently required to detect, predict and analyze the economy for early economic planning and
growth. Consequently, in this paper, we use machine learning classifiers and regressors to construct an early warning model
to tackle economic recession due to the cause of covid-19 pandemic outbreak. A publicly available database created by the
National Bureau of Economic Research (NBER) is used to validate the model, which contains information about national
revenue, employment rate, and workers' earnings of the USA over 239 days (1 January 2020 to 12 May 2020). Different
techniques such as missing value imputation, k-fold cross validation have been used to pre-process the dataset. Machine
learning classifiers- Multi-layer Perceptron- Neural Network (MLP-NN) and Random Forest (RF) have been used to predict
recession. Additionally, machine learning regressors-Long Short-Term Memory (LSTM) and Random Forest (RF) have
been used to detect how much recession a country is facing as a result of positive test cases of covid-19 pandemic.
Experimental results demonstrate that the MLP-NN and RF classifiers have exhibited average 88.33% and 85% of
recession (where 95%, 81%, 89% and 85%, 81%, 89% for revenue, employment rate and workers earnings, respectively)
and average 90.67% and 93.67% of prediction accuracy for LSTM and RF regressors (where 92%, 90%, 90%, and 95%,
93%, 93% respectively).
Keywords: Multi-Layer Perceptron (MLP); Long Short-Term Memory (LSTM), Random Forest, Economic Recession,
Machine learning (ML), Covid-19.
1- Introduction
An economic forecast directly affects the financial
institutions during a pandemic outbreak caused by
contagious organisms. Any wrong decision taken during
this time may have significant adverse effects. As a result,
detection of different economic sectors plays a vital role in
finance. Over the decades, multiple pandemic outbreaks
have taken place. For instance, the Spanish Flu (1918-
1919), which is estimated to have infected and killed
millions of people causing a severe impact in economic
sectors. Asian Flu (1957-1958) which has also killed
millions of people worldwide, depleting the economy
across the globe. SARS coronavirus (2003) caused
respiratory illness and killed 774 people creating a huge
negative impact on human health as well as the economy.
Swine Flu (2009) caused the death of 150000 to 575000
people, depleting the stock markets, tourism, food as well
as transportation industries incurring a considerable loss.
And lastly the novel Coronavirus (COVID-19) (2019-
present) causing the death of 6.3 million people till now
and destroying the economy throughout the world [1].
Significant numbers of countries have already gone
through a financial crisis after a pandemic outbreak. For
example, the SARS outbreak hit many Asian countries’
economies and took millions of lives [2]. The economic
costs from a global disease go beyond the direct damages
incurred in disease-inflicted countries' affected sectors.
The disease spreads rapidly through countries across
networks linked to worldwide travel. Any economic shock
to one country spreads quickly to other countries through
expanded trade and financial ties related to globalization.
Infectious diseases are likely to increase the global cost.
As a result, it is essential to take the early initiative toNahid Hasan, Ahmed, Ashik, Jahid Hasan, Azmin & Uddin, Author Guide for preparing a paper for the journal of information … 164
revive the economy. This paper provides a method for
predicting the economy during a pandemic outbreak. In
particular, the techniques that have been used are
examined, the experiments that have been conducted are
reviewed, and directions of future work from the
perspective of machine learning are considered [3]. This
model will capture crucial linkages across different
economic sectors, thereby comprehensively measuring
disease-related costs.
Millions of livelihoods around the globe are affected by
the economic instability created by the pandemic.
Everyone fights a longstanding battle against
microorganism, which causes the pandemic and affects
people’s livelihood throughout the world. However, such
pandemics are a problem of an entirely different nature
and demand an unparalleled response scale. To respond to
the imminent challenges to the long-term impact on the
country’s economy, machine learning techniques are used.
Machine learning techniques can detect economic crises
which help the public and private sector leaders, as well as
the policymakers, plan a better solution to combat the
financial crisis. Previously, Keogh-Brown et al. described
that due to SARS virus outbreak 3.7% loss in GDP
(US$ billion), 23.1% loss in export and trade (US$ billion),
and 0.86% loss in tourism (US$ billion) sector in Hong-
Kong was recorded [4]. Canada loses 3.2-6.4% in GDP
(US$ billion), 1% in Growth (US$ billion), 5.2% in export
and trade (US$ billion), 0.03% in tourism (US$ billion)
and 6.25% in Airline (US$ billion) [4].
On the other hand, in 2020, in the USA, due to the Covid-
19 outbreak, different economic sectors were affected.
Those sectors are affected by increasing covid-19 positive
test cases daily, which causes a national economic
recession. Earnings received by workers will decrease by
increasing positive test cases compared with January 2020.
Falling workers' wages suggests recession which causes
unemployment and downward pressure on wages.
Manufacturing sector workers earnings decreased 41%,
Retail Trade workers’ earnings decreased 36%,
Transportation and Warehousing decreased 30% and
Health Care, and Social Assistance decreased 31%.
Employment level is also affected by this pandemic
situation. Employment level or employment rate is defined
as the number of people engaged in productive economic
activities. Manufacturing employees' level decreased 41%,
Retail Trade employees' level decreased 38%,
Transportation and Warehousing decreased 32% and
Health Care, and Social Assistance decreased 31%
compared with January 2020.
These sector-wise downturns of employment rate and
worker wages reflect the USA's national economic
recession. Moreover, net Revenue for all businesses is also
decreasing simultaneously. The maximum employment
rate was 1% at the end of January 2020. Still, with the
increase of positive test cases, it gradually decreased and
within the first week of May 2020, the rate decreased 39%
compared with January 2020. Also, workers' wages
decreased 38% within the first week of May 2020.
However, revenue for all small businesses started
increasing from the last week of January 2020, and the
maximum value was 14%. Suddenly, it started decreasing,
and at the end of March 2020, revenue decreased 49%
compared with January 2020.
The paper aims at defining robust financial crisis
predictors. A link between a covid-19 pandemic and its
impact on people's revenue, earnings, and employment is
found. The chosen data-set consisting of different sectors
revenue, earnings, and employment helped to find how a
pandemic affects the economy. In comparison, this paper's
uniqueness lies in the variables commonly correlated with
the novel covid-19 pandemic. Overall, this paper
contributes to decision-makers and leaders detecting the
economic crisis during or after a pandemic and introducing
measures to eliminate or dampen a crisis entirely.
2- Literature Review
A number of researches have been conducted due to the
rise and fall of the economy during the pandemic. These
studies relate how a pandemic can influence a country's
economy, culture, people and others.
Smith et al. has shown the UK’s economy's impact based
on the Computable General Equilibrium (CGE) model [5].
This research estimates that only pandemic influenza can
minimize GDP by 0.3%, 0.4%, and 0.6% for mild,
moderate, and severe cases, respectively. Additionally,
losses of different sectors are 1.5% in domestic output, 2%
in household consumption, 3% in exports, 2.5% in imports,
2% in government consumption as calculated from data-
set 2003 supply chain in the UK. This paper presented that
a large portion of the economy was damaged due to the
pandemic.
Keogh-Brown et al. suggest macro-economic outcome
after SARS outbreak, through affected countries and their
economic sectors evaluated by economic indicators [4].
Researchers calculated losses of various sectors such as
GDP, growth, exports and trade, tourism, food and travel.
In Hong-Kong, 3.7% loss in GDP, 4.75% loss in Growth,
23.1% loss in export and trade, and 0.86% loss in tourism
is recorded according to their databases. This research
gives a clear picture of affected sectors of individual
countries and why stakeholders could develop solutions to
be aware of the next pandemic outbreak.
Fernandez-Delgado et al. compared several classification
algorithms to predict the economic crisis [6]. The results
showed that multiple models demonstrated different
detection results. Hence, deciding which one to be selected
was a challenge. Lastly, the random forest familyJournal of Information Systems and Telecommunication, Vol.11, No.2, April-June 2023 165
algorithm showed the best results in the early warning of
the economic crisis.
In recent years, bankruptcy forecasts have been made by
machine-learning using standard statistical approaches [7].
To obtain improved failure–detection solutions of
problems, analysis has been done using the mathematical
and machine learning techniques [8]. In particular, the
datasets, financial partnerships, country of origin, and the
timeline of the analysis were used, and the results and
implementation were compared with several different
detection accuracy techniques [3-8].
This paper aims to detect and forecast the financial status
of institutions or individuals by using machine learning
algorithms [3]. If this can be done, human sufferings can
be reduced by taking the best decision and the financial
crisis can be overcome. Here, tools such as neural
networks, decision trees, etc., have been extensively
studied to predict financial crises. Use MLP, Random
Forest (RF) [36] to apply machine learning methods, such
as pattern classification techniques, single classification
techniques and soft classification techniques. We have
seen some problems that are not widely discussed in the
literature in the observation. When different datasets are
used for different training and evaluation sets and cross-
validation, more accurate results can be obtained.
It is difficult to make crucial decisions due to the
vulnerability of the emerging coronavirus outbreak. The
deep learning and fuzzy detection approach are proposed
by Fong et al. on different outcomes of Coronavirus and
its effect [9]. The current events and possible actions were
described using the Composite Monte-Carlo simulation
system. Fong et al. addressed the daunting challenges of
predicting the fate of an outbreak correctly effectively
using the availability of dataset, the layout for picking the
best predictive model and finely tuning each model’s
parameter [9].
The statistical data were benchmarked in a paper by
Bluwstein et al. (2020), used in many machine learning
models, such as decision trees, random forests, large-scale
random trees, SVM [38] and artificial neural networks
[10]. The finding of the paper, except for human decision-
making agencies, all machine learning models performed
better than logistic regression [10]. The best performing
machine learning model (a tree that is too random) can
correctly predict the global financial crisis of 2007-2008
and provide outstanding signals in countries and regions
with different economic realities and achievements [10].
In [11], Nyman gives an actual forecasting scenario
where they use a small number of financial variables for
the detection of the economic recession. Two estimation
techniques- ordinary least squares regression and random
forest machine learning were utilized. Random forests
noisy, non-linear, high-dimensional detection can be
tackled using machine-learning models [12-13]. The
author obtains qualitatively similar results for the UK and
USA through the random forest algorithm's predictive
power is more efficient for the USA. Finally, the author
says the machine learning approach is very efficient for
forecasting horizons and providing better information.
Car, Z. et al. [14] built a model that can detect the
spread of covid-19 infection to predict its impact. They
used a 51- day data set to train a multi-layer perceptron
(MLP) neural network, and chose to use a grid search
algorithm for hyperparameter optimization. After
performing k-fold cross-validation, they found that the
accuracy of positive confirmed cases was 94%, the
accuracy of recovered patients was 78%, and the accuracy
of deceased patients was 98%. This is an excellent model
for the detection of covid-19 infection.
To date, many models have been developed with different
domain knowledge to predict the economic crisis. Logistic
regression (Ohlson 1980) and factor analysis are some of
the conventional statistical approaches (West 1985) [15-
16]. Some of Artificial Intelligence methods such as
artificial neural network ANN (Atiya 2001), Support
vector machine (SVM) (Min and Lee 2005) (Shin et al.
2005), Bayesian networks (Sarkar and Sriram 2001) (Sun
and Shenoy 2007) and many integrated machine learning
techniques (Fedorova) et al. 2013) (Abellán and Mantas,
2014), several hybrid methods are widely used to predict
economic crises [17-22].
3- Proposed Methodology
This section discusses constructing the models to
determine the impact of economic indicators in a country
due to a pandemic. Firstly, we start with a description
describing where we have collected datasets, structure, etc.
Then, how we process the data-set to fit into the models.
Then, the implementation of algorithms for detecting
recession due to this covid-19 pandemic. Figure 1 presents
detailed architecture of the proposed model.
Fig. 1 Architecture of proposed model
3-1- Data Description
The Opportunity Insights Team built a publicly available
database [23]. The database tracks economic activity at a
granular level in real-time using anonymized data from
private companies. They build the database using private
sector data to show the Economic Impacts of COVID-19.Nahid Hasan, Ahmed, Ashik, Jahid Hasan, Azmin & Uddin, Author Guide for preparing a paper for the journal of information … 166
They studied how COVID-19 affects the economy by
examining heterogeneity in its influences. The data-set
used in this research is collected from a publicly available
archive, operated by the Opportunity Insights Economic
Tracker. The archive contains data from leading private
companies from credit card providers to payroll firms to
offer a real-time image of indicators such as employment
rates, consumer spending, and job postings across counties,
industries, and income groups. The data-set is split into
employment rate, worker's earnings, and national revenue
of various economic sectors. During this research, the
dataset contained the data of 239 days for COVID-19
positive cases, small business revenue, and employment
rates among low-income workers. Moreover, the chosen
data-set, as published, is organized as time-series data.
Besides, this dataset contains data points of 239 days,
which is split into five folds.
3-2- Data Preprocessing
The dataset has three different sorts of information:
employment rate, worker's earnings, and national revenue
of various economic sectors. Firstly, the dataset was time-
series data, so we converted it to fit the model. As we are
classifying, is there any recession due to the impact of
covid-19? If any value from the employment rate of all
sectors is negative, then there exists a recession; otherwise,
not. For this purpose, we are adding one extra feature into
the database depending on the overall employment rate,
which will be the attribute column for classifying
recession in employment rate and the same for others.
In the real-world data-set, missing data points are not
unexpected. In this paper, used data-sets even have
missing data points. We used statistical imputation to fill
up the gaps of missing data points to reduce biases.
Although there are varieties of techniques for imputation,
we have used mean values for each feature. Replacing
missing data points with mean is simple; besides, it does
not introduce many biases in the data.
(1)
Each data set is divided into five random folds used to
train and validate the model. Here, folding is used to train
the model (k-1) times, and the rest will be used to verify
the model, where k = 5. This process continued unless
each fold was used as a test set for the model, which gave
us the advantage of having a generalized model. In
addition, because the data points are limited; therefore, this
K-fold cross-validation technique has helped us use each
data point as a training set, and a test set [24]. To
determine the cross-validation result, we calculate the
average of the R2
scores.
∑ (2)
3-3- Implementing Classifier in Economic
Recession Detection Model
This section discusses how we detect economic recession
due to pandemic outbreaks. We first use MLP (multilayer
perceptron) to detect the issue first and then Random
Forest classifier. Both algorithms help us determine the
economic recession a country might face due to this covid-
19 effect.
3-3-1 Multi-layer Perceptron Classifier
In Artificial Neural Network, Multi-layer Perceptron
(MLP) is a fully connected feed-forward neural network
that mimics the human brain to build up a machine
learning model. Multi-layer Perception (MLP) is a class of
Feed-forward Artificial Neural Network (ANN). MLP has
three kinds of a layer, such as input layer (i), which has an
equal number of neurons, same as data-set features, hidden
layer and output layer (k) consist of a single
neuron. Signals flow from left to right layer by layer for
computing output of each neuron, which is named as
Forward Propagation of Function Signals [25]. Again, to
minimize errors of the network, an error signal in the
output neuron propagates backward layer by layer referred
to as Backward Propagation of Error Signal.
To generate a network that can produce a higher accurate
result, choosing hyper-parameters is a crucial factor. For
the different values of hyper-parameters, the network will
show different performance. For instance, if a hyper-
parameter like the number of iterations is excessive then
the network might face an over-fitting problem.
Additionally, depending on the learning rate, the network
will converge slowly or quickly. We applied the Grid
Search Algorithm to find best-fitted hyper-parameters such
as weights, learning rate, number of hidden layers, etc., for
network convergence [26]. Besides, we set a few hyper-
parameters constant such as stochastic gradient descent,
which is a solver for weight optimization, a maximum
number of iterations is 100, activation function (relu), an
initial learning rate 0.1. However, Summation of inputs
and connected links weights will pass through relu
activation function. Rectified Linear Unit (relu) function
shows better convergence performance and is
computationally efficient since it maps only the value max
(0, z) where z is z>0. This function is also differentiable.
Hence, the total equation of output from the i-th neuron is,
( ) (∑ ) (3)
Here, relu is the activation function, is the weights of
connected links, are inputs, and is the bias in thisJournal of Information Systems and Telecommunication, Vol.11, No.2, April-June 2023 167
case it is 1. This process of computing output is the same
for all hidden layer and output layer neurons.
An activation function decides whether it will fire the
output of that particular neuron or not. Now, ɳ is the
learning rate, which decides how quickly the network will
converge and we put ɳ=0.1 so that machine can learn
slowly and perform with higher accuracy in the long run.
Hence updated Delta rule,
( ) (4)
Where is Local Gradient, and is the input of k-th
neuron or output from j-th neuron, is the previous
iteration's weight. After that, equations for calculating is
different for hidden and output layers. If k-th is a neuron of
the output layer,
(∑ )( ) (5)
Here, is the desired output from the k-th neuron, and
is the first derivative of the activation function. Again
for j-th neuron of a hidden layer,
(∑ )(∑ ) (6)
Where c is the set of next hidden/output layer neurons
and is a set of input layer neurons or hidden layer
neurons, but it is the previous layer of j-th neuron's layer.
In this way, MLP model training will continue until it
meets stopping criteria. When the Average square error
(loss function) change is sufficiently small for per epoch,
then the training process will stop. Another measure is,
after each period, the MLP model will be tested for
Generalization, and if this generalization performance is
suitable only then, training will stop.
After putting the values mentioned above, we have got a
satisfactory result from the network. However, to check
this network's robustness, we have applied the k-fold (k=5)
cross-validation technique. After applying this technique,
some of the results dropped, and some showed more
accuracy. Nevertheless, this difference is shallow, so this
network fulfilled our exception for detecting the issue that
we wanted to solve. Finally, this is a simplex network
having the ability to solve a complex problem like
detecting financial crisis with lower training time.
3-3-2 Random Forest Classifier
The random forest classifier is a collection of projected
trees, where each tree is subordinate to independently
evaluated random vectors, with comparable transport
within the random forest with one another tree. It, too
accomplishes the proper speed required and productive
parameterization within the process. The random forest
classifier bootstraps random tests where the expectation
with the most elevated vote from all trees is chosen. The
distinction of each tree is ensured due to the taking after
qualities. To begin with, each tree training within the test
employs random subsets from the beginning training tests.
Besides, the ideal part is chosen from the unpruned tree
nodes' arbitrarily chosen features. Thirdly, each tree
develops without limits and ought not to be pruned at all.
In this model, we have implemented a random forest
classifier for classification that uses an ensemble learning
approach to detection [27], which uses several decision
trees during the training process and average individual
tree detection outputs. Random Forest efficiently runs on
massive data-sets, can handle thousands of input variables
without variable deletion, produces significant variable for
forecasts, creates an internal unbiased measure of
generalization error as forest growth increases, has an
adequate method to estimate lost data, and maintains
accuracy where a large proportion of data is lacking
[12,28]. The chosen RFC's key objective is the power of
the individual decision tree and the relation between base
trees [12]. Random forest classifier comprises various
individual classification trees, where each tree may be a
classifier given diverse weighted classification. The output
of the classification determined the overall classification.
It builds each tree by part number of features for each part
without pruning [29].
Fig. 2 Random Forest model
The classifier of Random Forest functions as consequently
[30]: we choose C subsets from which to construct the
training set T and initial training data D using bootstrap
sampling
(7)
The algorithm automatically generates the decision tree for
C models with a random vector θc for each subset:
(8)
The random vectors c, c = 1,2......C are both distinct and
distributed identically. Each decision tree evolves freelyNahid Hasan, Ahmed, Ashik, Jahid Hasan, Azmin & Uddin, Author Guide for preparing a paper for the journal of information … 168
without pruning so that all the trees are combined to get a
forest.
( ) (9)
For determining the classification of a new input variable t,
the final vote of each established decision tree model is
accurate. The result for classification is:
( ) ∑ ( ( ) ) (10)
Where R(t) denotes the product of the classification is; ri(t)
denotes the outcome of the decision tree classification; Z
is the target group, and I (ri(t)=Z) stands for the
characteristic function.
n-estimators are the number of trees in the forest. Having a
few distinctive forms of trees with different depths and
sizes boosts the generalization of the n-estimators’ trees
that the algorithm needs to construct. If the estimator is n,
it gives n other decision trees. Using n-estimators, we
build several trees within a Random Forest before
aggregating the detection. We want to make the
computational expense while taking the trees as it delays
code to run.
Using the criterion Gini-impurity, we determine the
feature of a tree that has to split the parameters. It
measures the quality of each split. We use a max-depth to
see how much further the tree has to be expanded to each
node until we get to the leaf node. We set the max-depth to
run the option for the risks of over-fitting this model. We
observe the impact of the max-features hyper-parameter.
We realize that the random forest selects a few random
tests to explore the main break from the functions. We can
see that the execution of the first increments demonstrates
that the number of max features increases.
Nonetheless, the training score keeps expanding after a
certain point. However, the test score saturates and begins
diminishing the conclusion, implying that the show starts
to over-fit. Ideally, the general execution of the
demonstration near six of the highest highlights is the most
notable. In general, the ideal number of total features tends
to be similar to this value. To decide whether the
algorithm will avoid further splitting, we use min samples
to define the minimum number of records present in each
node. If the split number is less than n, there will be no
further split. We use max-leaf nodes to expand the tree in a
best-first manner resulting in a relative reduction in
impurity. We use max-leaf nodes to grow the tree in a
best-first way resulting in a relative decrease in impurity.
The random state makes it simple for others to imitate
results if given the same training data and parameters. For
sampling data points, we use the bootstrap process.
The algorithm randomly selects many rows with
replacement to construct the trees using bootstraps once
we provide the Random Forest Classifier model's training
data. If the bootstrap option is set to False, there will be no
random sampling, and the entire data set will be used to
build the trees. We use oob-score as it is much quicker
because it gathers all of the trees' observations and finds
the highest score on each observation base's trees that did
not use that observation to train. Oob-score is a cross-
validation technique similar to a leave-one-out validation
technique in which a model's generalized approximate
output is trained on n-1 data samples. We set n-jobs to -1
will often lead to faster processing. If we use -1, there is
no limit on how much computing resources the code can
use n-jobs helps the program know how many processors
it can use. The default value of 1 means that only one
processor can be used. We set the logging output to be
verbose, which gives us continuous feedback on what the
model is doing as it is processed. This parameter defines
the verbosity of the construction method of the tree. We
use false Warm Start for recursive feature collection, and
false Warm Start suggests that other features will gain in
value as we drop such features, and it will be repeated
used. It is often used in regression models with backwards
exclusion and is not often used in classification models.
3-4- Implementing Regression in Economic
Recession Detection Model
This section covers how much economic recession a
country might face due to a pandemic outbreak in an
individual economic sector. First, we will discuss how
RNN implementation helped then Random Forest
regressor.
3-4-1 Long term short-term memory
In this model, we used the long-term short-term memory
(LSTM) method to estimate the economic impact of the
COVID-19 outbreak on different regions of the United
States [31,37]. When dealing with time series, we used
LSTM modelling, an in-depth learning method that is
useful when trying to model time series. In the LSTM unit,
there are four functions in this model, which are 3
Sigmoids (f, i and o below) and Tanh (c function below). It
is mentioned that the coefficient of deviation may be a
general feature of all functions in the learning model,
which can be set or measured in advance during the
training process. In order to help it adjust to the various
situations of each case, the bias can be used to model
calibration. A common LSTM cell is formed of three
gates-input gate, output gate, and forget gate [32].
In the LSTM structure, the first layer is called the forget
gate, which selects the information to forget. It can
produce any value between 0 (completely forget) to 1
(usefully) [33].Journal of Information Systems and Telecommunication, Vol.11, No.2, April-June 2023 169
( ( ) ) (11)
The next step of the algorithm is to determine the new
input which needs to be added.
( ( ) ) (12)
After that, the algorithm determines the new candidate
value of neural cells.
( ( ) ) (13)
After computing above equations, it states the new cell
states by computing Ct.
(14)
Lastly, the output function will predict the value. This
layer is called detection layer and the detection will then
( ( ) ) (15)
( ) (16)
We add the LSTM layer and later integrate a few Dropout
layers to prevent overfitting. We integrate the LSTM layer
with 50 units which is the dimensionality of the output
space. We define the dropout layers 0.2. This indicates that
it will reduce the number of layers by 20%. After that, we
merge the dense layer, which determines the output of 1
unit. Next, we used a very common optimizer, the Adam
optimizer. Then, we fit the LSTM model to run at 100
epochs and 32 batch sizes.
We will conduct a k-fold on the data to improve results'
complexity. K -fold is a cross-validation technique that
requires the creation of various models on subsets of the
data set. This approach would be very beneficial in
achieving the desired predictive precision standard.
3-4-2 Random Forest Regressor
The random forest regression (RFR) incorporates a vast
collection of decision trees trained together to produce a
more precise and reliable final forecast [12]. A regression
tree is ordered from the leaf to the root node based on
some parameters. RFR consists of a supervised learning
algorithm for predicting output target feature average by
bootstrap aggregation or bagging of independently built
decision trees [34]. Bootstrap aggregation or bagging is
used for lowering variance error sources of independently
built decision trees. We first randomly select points from
the training data set of employment rate, worker income
and revenue of different sectors. Then we created a
bootstrap sample of the random data with replacement and
created the root node, eventually forming a decision tree.
After that, we created 200 different decision trees from it.
To estimate an economic recession, each decision tree
forecasts a data point value for worker income,
employment rate and revenue and finally assigns the
average new data point over all the expected values.
Forest-random regression trees use a greedy top-down
method to define ideal recursive divisions in binary nodes.
( ) (∑ ( ) ) (17)
Here SSE=Sum Squared error, output target feature
data, and terminal node output target feature mean
And is calculated by,
∑ ( ) (18)
Here is the mean terminal node, m=number of
observations in the terminal node, and output target
feature data.
In a Random Forest regression algorithm, tree bagging
consists of predicting the output feature of an
independently built decision tree by calculating the
arithmetic mean,
∑ ( ) (19)
Here mean output target feature detection, k=number
of independently built decision trees, and
=independently built decision trees output feature
detection.
Unlike other machine learning techniques, Random Forest
regressor only needs to set two parameters to construct a
detection model: the number of regression trees and the
random state, which is 200 regression trees and the
random state is set at 0. For accuracy, we calculated the
mean absolute error, which gives the average of error in
detection and mean squared and root mean squared error
to check how close the detection is to the actual value.
Lastly, we cross-validation to check how well random
forest regression performs on test data.
4- Result and Discussion
In this section, we discuss the achieved results in detail by
following the described methodology. We will also
analyze essential factors for achieving these results.
4-1- Result of Classifiers
We choose to use two different classifiers to detect a
country's recession due to a pandemic. Now we will
discuss results found from multi-layer perceptron and
random forest algorithm described in section -4.1. The
formulas for calculating Table 1 values for MLP and
Random Forest classifiers are equations no. 20, 21, and 22.Nahid Hasan, Ahmed, Ashik, Jahid Hasan, Azmin & Uddin, Author Guide for preparing a paper for the journal of information … 170
(20)
(21)
In equation 21, TP = true positive and FN = false negative.
(22)
In equation 22, TN = true negative and FP = false positive.
4-1-1 Multi-layer perceptron
The MLP classifier demonstrated an accuracy of 81% for
the employment level, 89% for worker earnings, and 95%
for national revenue as shown in Table 1. To achieve these
results, we have used the initial learning rate (alpha) 0.1,
relu activation function, three hidden layers with different
units of neurons, and others.
Table 1: Results from MLP classifier (CV=cross validation
Section Accu
racy
Sensiti
vity
Specificity Accuracy
(cv)
Employmen
t level
81% 100% 0% 82%
Worker
Earnings
89% 100% 0% 88%
National
Revenue 95% 100% 67% 87%
Sensitivity for all sectors was 100%. Nevertheless,
specificity was 0%, 0%, and 67% for employment level,
worker earnings, and national revenue, respectively.
However, applying k-fold cross validation where k=5,
suddenly, the accuracy showed different results. We get
the mean value of 5 folds, 82% for employment level, 88%
for worker earnings, and 87% for national revenue,
respectively, as displayed in Table 1.
Fig. 3 Results from MLP classifier before and after cross validation (CV)
Figure 3 demonstrates accuracy before and after cross-
validation of all three sectors. For employment level,
accuracy increased after cross-validation, but accuracy
decreased for worker earnings and national revenue.
4-1-2 Random Forest classifier
By using the Random Forest classifier, we got an accuracy
of 81% for employment level, 89% for worker earnings,
and 85% for national revenue shown in Table 2. We have
used n-jobs equal to -1 for faster processing, logging
output as verbose for continuous feedback, n-estimator is
100 and used criterion as gini for the Gini impurity.
Table 2: Results from Random Forest classifier
Section Accuracy Sensitivity Specificity Accuracy(cv)
Employment
level
81% 100% 0% 98%
Worker
Earnings
89% 100% 0% 99%
National
Revenue
85% 100% 67% 98%
Sensitivity for all sectors was 100%. Nevertheless,
specificity was 0%, 0%, and 67% for employment level,
worker earnings, and national revenue, respectively.
However, applying k-fold cross validation where k=5,
suddenly, the accuracy showed different results. We get
the mean value of 5 folds, 98% for employment level, 99%
for worker earnings, and 98% for national revenue,
respectively, as displayed in Table 2.
Figure 4 exhibits accuracy before and after cross-
validation of all three sectors. For all three sectors,
accuracy increased after cross-validation.
Fig. 4 Results from Random Forest classifier before and after cross
validation (CV)
4-2- Result of Regressors
We used two different regressors, long short-term memory
and random forest, to determine how much loss a country
might face for a pandemic effect. This section will discuss
experimental results found from them described in section
4.2. The formulas for calculating Table 1 values for LSTM
and Random Forest regressors are equations no. 23,24, 25
and 26.Journal of Information Systems and Telecommunication, Vol.11, No.2, April-June 2023 171
(23)
(∑ ) (24)
In the equation 24, =predicted value =true value and
n=total number of data points
(∑ ( ) ) (25)
In the equation 25, = predicted value = true value and
n = total number of data points
√(∑ ( ) ) (26)
In the equation 26, = predicted value = true value and
n = total number of data points.
4-2-1 Long term short-term memory
From Table 3, we got an accuracy of 90.04% for
employment level, 90.33% for worker earnings, and 92.62%
for national revenue using the LSTM. We get 2.63% mean
absolute error, 0.12% mean squared error, and 3.46% root
mean squared error for national revenue. Again, 4.87%
mean absolute error, 0.24% mean squared error, and 4.89%
root means squared error for employment level. Finally,
4.68% mean absolute error, 0.22% mean squared error,
and 4.72% root means squared error for worker earnings.
Table 3: Results from LSTM regression
Section Accuracy MAE MSE RMSE
Employment
level
90.04% 4.87% 0.24% 4.89%
Worker Earnings 90.33% 4.68% 0.22% 4.72%
National
Revenue
92.62% 2.63% 0.12% 3.46%
The visual representation of actual and predicted data
using LSTM regression are in Figures 5, 6 and 7.
Fig. 5 Comparison of real and modeled (LSTM) data of employment rate
of all sectors.
Figure 5 illustrates actual (original labeled) and predicted
(predicted labeled) data we found using LSTM for
employment rate or level. This figure, the x-axis, shows
the number of days, and the y-axis shows the employment
rate for all sectors. The predicted rates are 90.04%
accurate.
Fig. 6 Comparison of real and modeled (LSTM) data of worker earnings
of all sectors
Fig. 7 Comparison of real and modeled (LSTM) data of national revenue
all sectors.
Figure 6 represents actual (original labeled) and predicted
(predicted labeled) data we found using LSTM for worker
earnings. This figure, the x-axis, shows the number of
days, and the y-axis shows worker earnings for all sectors.
The predicted earnings are 90.33% accurate.
Figure 7 shows actual (original labeled) and predicted
(predicted labeled) data we found using LSTM for national
revenue. This figure, the x-axis, shows the number of
days, and the y-axis shows the national revenue for all
sectors. The predicted rates are 92.62% accurate.
4-2-2 Random Forest regression
From Table 4, we get an accuracy of 93.16% for workers'
earnings, 93.18% for employment level, and 95.53% for
national revenue using the random forest regression. We
get 3.63% mean absolute error, 0.16% mean squared error,
and 4.05% root means squared error for employment level.
Again, 3.65% mean absolute error, 0.15% mean squared
error, and 3.97% root means squared error for worker
earnings. Finally, 2.02% mean absolute error, 0.07% mean
squared error, and 2.69% root mean squared error for
national revenue. From Table 4, it is clear that accuracyNahid Hasan, Ahmed, Ashik, Jahid Hasan, Azmin & Uddin, Author Guide for preparing a paper for the journal of information … 172
for the employment level, worker earnings, and national
revenue is consistent, and the error percentage is low.
Table 4: Results from Random Forest regression
Section Accuracy MAE MSE RMSE
Employment
level
93.18% 3.63% 0.16% 4.05%
Worker
Earnings
93.16% 3.65% 0.15% 3.97%
National
Revenue
95.53% 2.02% 0.07% 2.69%
The visual representation of actual and predicted data
using random forest regression are in Figure 8, 9 and 10.
Fig. 8 Comparison of real and modeled (Random Forest Regression) data
of worker earnings of all sectors.
Figure 8 illustrates actual (original labeled) and predicted
(predicted labeled) data we found using random forest
regression for employment rate or level. This figure, the x-
axis, shows the number of days, and the y-axis shows the
employment rate for all sectors. The predicted rates are
93.18% accurate.
Fig. 9 Comparison of real and modeled (Random Forest Regression) data
of employment rate of all sectors.
Figure 9 represents actual (original labeled) and predicted
(predicted labeled) data we found using random forest
regression for worker earnings. This figure, the x-axis,
shows the number of days, and the y-axis shows worker
earnings for all sectors. The predicted earnings are 93.18%
accurate.
Fig. 10 Comparison of real and modeled (Random Forest Regression)
data of national revenue all sectors.
Figure 10 shows actual (original labeled) and predicted
(predicted labeled) data we found using random forest
regression for national revenue. This figure, the x-axis,
shows the number of days, and the y-axis shows the
national revenue for all sectors. The predicted rates are
95.53% accurate.
4-3- Discussion
The goal of this model is to provide approximately
financial downfall due to the pandemic by analyzing eight
months (239 days) data of different economic sectors. The
models demonstrated that it is possible to achieve a quality
model using economic indicators as inputs through multi-
layer perceptron (MLP), long short-term memory (LSTM)
RNN, and Random Forest classifier and Regressor. The
revenue, employment level, and worker earnings models
use the same learning rate. When more data is available, a
new detection can be produced with the latest data set by
the neural network and random forest algorithms. The
findings demonstrate the potential to use these algorithms
in the future to model almost the same phenomenon. We
have developed this model solution on all available data,
which is incredibly constrained. Although the volume of
data is minimal, in all three situations, we have superior
accuracy.
In the MLP classifier, we got 81% accuracy for
employment level, 89% for worker earnings, and 95% for
national revenue. Although applying k-fold, employment
level and worker earnings model accuracy increased,
national revenue model accuracy decreased from 95% to
88%. On the other hand, LSTM revenue got 92.62%,Journal of Information Systems and Telecommunication, Vol.11, No.2, April-June 2023 173
LSTM employment rate got 90.04%, and LSTM earnings
got 90.33%, which is appreciable with this limited amount
of data. Including one year of training data and validation
data to improve these models to decrease the data
limitation problem. Besides, to improve this model for
higher accuracy in the future by enclosing bidirectional
LSTM, recurrent neural networks, and other appropriate
algorithms in the current model.
For the global pandemic situation like COVID-19, we
used different economic sectors reports as inputs. We
correctly predicted the economic recession outbreak,
including revenue, employment rate, and earnings data set.
Like the LSTM, MLP, we use random forest classifier and
regression to learn national revenue, employment level,
and workers' earnings. This model has done an excellent
job of predicting the most recent data. The model gives us
a positive indicator for foreseeing the economic recession.
Though we have used limited data for this detection, we
got excellent accuracy in all the cases.
The advantage of the random forest classifier is its tall
precision for multi-class classification, which is of the
highest need [12]. In addition, as the random forest
classifier builds different decision trees, and the ultimate
result is assessed depending on the voting of these trees,
the issue of overfitting happening in a single choice tree
approach is killed. The random selection of feature vectors
and random choice of features during learning makes the
Random Forest classifier and Regressor solid and
productive for any dataset [12]. Forecast analysis from [35]
appears to have an accuracy of up to 90% in foreseeing
classes with an ensemble approach. Using the random
forest classifier model, we got an accuracy of 81% for
employment level, 89% for worker earnings, and 85% for
national revenue.
On the other hand, using the Random Forest regression
model, we got an accuracy of 95.53% for national revenue,
93.18% for employment level, and 93.16% for worker
earnings. After applying k-fold cross validation where k=5,
suddenly the accuracy level showed different results for
random forest classifier. Taking the mean value of 5 folds,
we get 98.94% for employment level, 99.04% for worker
earnings, and 98.43% for national revenue, prepared with
a limited amount of data. Random Forest Classifiers and
regression are helpful tools for economists and
practitioners dealing with forecasting economic recession
detection.
We did provide a warning model system for increasing
awareness of an upcoming shock event. Economic crisis
detection is essential for practitioners and policymakers
since it provides an in-depth understanding of economic
linkage breakdowns after a crisis. We proposed a system
where we selected some crucial indicators that can be used
to predict the economic crisis. As we know that economic
conditions are continually changing, and during a
pandemic, it changes drastically. So economic downfall
detection will remain an open research issue with many
situations and challenges to address. Continuously train
the data-set with a more diverse set of machine learning
algorithms and deep learning architectures that will benefit
this research. The use of a developed and more robust
technique will enhance the detection of the forecasting
economy. Finally, a large amount of data-set will allow us
to predict more accurately by filtering out noise embedded
in the time series data.
Furthermore, cross-validation and comparison of training
and testing data sets are essential. Since it helps one truly
understand the models' meaning and efficiency and thus
improve the outcome's reliability. In this prospective
research aspirants, the importance of these latest
technologies needs to be discussed. Before a country faces
an economic recession, it is crucial to identify which
sector to emphasize to minimize this unexpected scenario.
Analyzing the data and detecting the economic impact to
help save a country's significant capital using machine
learning.
5- Conclusion
Several studies demonstrate that pandemic outbreaks
caused considerable economic changes. In this present day,
Covid-19 makes a tremendous economic impact on the
global economy in terms of revenue, employment level,
workers' earnings, and many more. The situation worsens
due to the covid-19 pandemic, so prediction of the
economic factor is necessary for taking early steps. So,
this paper uses machine-learning algorithms to identify
and predict the recession. This paper detected the recession
in three different sectors of the USA that occurred due to
this pandemic and got higher accuracy. When more data is
available, the performance will be much higher. Including
other algorithms and more data, we can forecast sector-
wise economic recessions. We can achieve a model that
can detect and forecast recessions that might occur in the
future and help stakeholders take decisions as early as
possible. To save a country's economy before it breaks
apart, this model could play a vital role.
Acknowledgments
This research is funded by Woosong University Academic
Research in 2023.
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