MLP and RBF Algorithms in Finance: Predicting and Classifying Stock Prices amidst Economic Policy Uncertainty

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Bushra Ali
Khder Alakkari
Mostafa Abotaleb
Maad M Mijwil
Klodian Dhoska


In the realm of stock market prediction and classification, the use of machine learning algorithms has gained significant attention. In this study, we explore the application of Multilayer Perceptron (MLP) and Radial Basis Function (RBF) algorithms in predicting and classifying stock prices, specifically amidst economic policy uncertainty. Stock market fluctuations are greatly influenced by economic policies implemented by governments and central banks. These policies can create uncertainty and volatility, which in turn makes accurate predictions and classifications of stock prices more challenging. By leveraging MLP and RBF algorithms, we aim to develop models that can effectively navigate these uncertainties and provide valuable insights to investors and financial analysts. The MLP algorithm, based on artificial neural networks, is able to learn complex patterns and relationships within financial data. The RBF algorithm, on the other hand, utilizes radial basis functions to capture non-linear relationships and identify hidden patterns within the data. By combining these algorithms, we aim to enhance the accuracy of stock price prediction and classification models. The results showed that both MLB and RBF predicted stock prices well for a group of countries using an index reflecting the impact of news on economic policy and expectations, where the MLB algorithm proved its ability to predict chain data. Countries were also classified according to stock price data and uncertainty in economic policy, allowing us to determine the best country to invest in according to the data. The uncertainty surrounding economic policy is what makes stock price forecasting so crucial. Investors must consider the degree of economic policy uncertainty and how it affects asset prices when deciding how to allocate their assets.


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Ali, B., Alakkari, K., Abotaleb, M., Mijwil, M. M., & Dhoska, K. (2024). MLP and RBF Algorithms in Finance: Predicting and Classifying Stock Prices amidst Economic Policy Uncertainty. Mesopotamian Journal of Big Data, 2024, 48–67.