Demographic projections

The Lee-Carter model is a stochastic mortality forecasting model developed by Lee and Carter in 1992. It assumes an invariant age component and linear time component for forecasting. The model is fit to historical mortality data and the resulting estimate of the time-varying parameter is then modeled and forecast as a stochastic time series. The Lee-Carter model can be seen as a special case of a principal components method with a single component and is equivalent to a multivariate random walk with drift (RWD) model. The method has been used for fitting and forecasting the mortality rate of many countries and is considered the leading statistical model for mortality forecasting in the demographic literature. This is the first development of the Lee Carter model for Romanian data.