Understanding Economic Forecasts

Front Cover
David F. Hendry, Neil R. Ericsson
MIT Press, 2003 - Business & Economics - 207 pages
0 Reviews

Historically, the theory of forecasting that underpinned actual practice in economics has been based on two key assumptions -- that the model was a good representation of the economy and that the structure of the economy would remain relatively unchanged. In reality, forecast models are mis-specified, the economy is subject to unanticipated shifts, and the failure to make accurate predictions is relatively common.

In the last decade, economists have developed new theories of economic forecasting and additional methods of forecast evaluation that make less stringent assumptions. These theories and methods acknowledge that the economy is dynamic and prone to sudden shifts. They also recognize that forecasting models, however good, are greatly simplified representations that will be incorrect in some respects. One advantage of these newer approaches is that we can now account for the different results of competing forecasts.

In this book academic specialists, practitioners, and a financial journalist explain these new developments in economic forecasting. The authors discuss how forecasting is conducted, evaluated, reported, and applied by academic, private, and governmental bodies, as well as how forecasting might be taught and what costs are induced by forecast errors. They also describe how econometric models for forecasting are constructed, how properties of forecasting methods can be analyzed, and what the future of economic forecasting may bring.

 

What people are saying - Write a review

We haven't found any reviews in the usual places.

Contents

How Economists Forecast
15
Economic Modeling for Fun and Profit
42
Making Sense of Published Economic Forecasts
54
Forecast Uncertainty in Economic Modeling
68
Evaluation of Forecasts
93
Forecasting and the UK Business Cycle
104
Modeling and Forecasting at the Bank of England
124
Forecasting the World Economy
149
The Costs of Forecast Errors
170
Epilogue
185
References
193
Author Index
203
Copyright

Other editions - View all

Common terms and phrases

Popular passages

Page 193 - The ERM and Structural Change in European Labour Markets: A Study of 10 Countries, National Institute of Economic and Social Research (NIESR), Discussion Paper, No.40, London.
Page 193 - REFERENCES Acemoglu, D. and Scott, A., (1994) "Asymmetries in the Cyclical Behaviour of UK Labour Markets", Economic Journal, November. Acemoglu, D., and Scott, A. (1995) "Asymmetric Business Cycles: Theory and Time Series Evidence", Mimeo, Oxford University. Andersen, Torben, M.(1995) "Adjustment Costs and Price and Quantity Adjustment" Economics Letters; 47(3-4), March, pages 343-49.
Page 193 - FEERs for the NIEs. In Collignon, S., Park, YC and Pisani-Ferry, J. (eds.) , Exchange Rate Policies in Emerging Asian Countries, pp.
Page 194 - Barrell, R. and Pain, N. (1998). Developments in East Asia and their implications for the UK and Europe.

References to this book

All Book Search results »

About the author (2003)

David F. Hendry is the Leverhulme Personal Research Professor of Economics and Fellow of Nuffield College at OxfordUniversity, UK.

Bibliographic information