Book contents
- Frontmatter
- Contents
- Acknowledgments
- List of Contributors
- Introduction
- 1 The ET Interview: Professor Clive Granger
- PART ONE SPECTRAL ANALYSIS
- PART TWO SEASONALITY
- PART THREE NONLINEARITY
- PART FOUR METHODOLOGY
- PART FIVE FORECASTING
- 17 Estimating the Probability of Flooding on a Tidal River
- 18 Prediction with a Generalized Cost of Error Function
- 19 Some Comments on the Evaluation of Economic Forecasts
- 20 The Combination of Forecasts
- 21 Invited Review: Combining Forecasts – Twenty Years Later
- 22 The Combination of Forecasts Using Changing Weights
- 23 Forecasting Transformed Series
- 24 Forecasting White Noise
- 25 Can We Improve the Perceived Quality of Economic Forecasts?
- 26 Short-Run Forecasts of Electricity Loads and Peaks
- Index
25 - Can We Improve the Perceived Quality of Economic Forecasts?
Published online by Cambridge University Press: 06 July 2010
- Frontmatter
- Contents
- Acknowledgments
- List of Contributors
- Introduction
- 1 The ET Interview: Professor Clive Granger
- PART ONE SPECTRAL ANALYSIS
- PART TWO SEASONALITY
- PART THREE NONLINEARITY
- PART FOUR METHODOLOGY
- PART FIVE FORECASTING
- 17 Estimating the Probability of Flooding on a Tidal River
- 18 Prediction with a Generalized Cost of Error Function
- 19 Some Comments on the Evaluation of Economic Forecasts
- 20 The Combination of Forecasts
- 21 Invited Review: Combining Forecasts – Twenty Years Later
- 22 The Combination of Forecasts Using Changing Weights
- 23 Forecasting Transformed Series
- 24 Forecasting White Noise
- 25 Can We Improve the Perceived Quality of Economic Forecasts?
- 26 Short-Run Forecasts of Electricity Loads and Peaks
- Index
Summary
“Economic predictions are fallible and advice is highly variable”,
President Jimmy Carter, Camp David Summit, Summer 1979, quoted by Klein (1981)Summary
A number of topics are discussed concerning how economic forecasts can be improved in quality or at least in presentation. These include the following: using 50% uncertainty intervals rather than 95%; noting that even though forecasters use many different techniques, they are all occasionally incorrect in the same direction; that there is a tendency to underestimate changes; that some expectations and recently available data are used insufficiently; lagged forecasts errors can help compensate for structural breaks; series that are more forecastable could be emphasized and that present methods of evaluating forecasts do not capture the useful properties of some methods compared to alternatives.
CRITICISMS OF FORECASTS
It is easy to find criticisms of economic forecasts, both of their perceived quality and of the methods used in their construction. Some of the criticism is from academics, such as by Keating (1985), and more appear in the business press. Examples of the latter are Robert Chote (New Scientist, 31 October 1992), “Why the chancellor is always wrong,” with sub-head “No one takes the governments forecasts of economic upturns seriously. The problem lies with the Treasury's computer model,” and by Robert Samuelson (Newsweek, 13 February 1995), “Soothsayers on the decline”, “Economists know less than they – or most Americans – think.” A great deal of this criticism is probably deserved.
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- Information
- Essays in EconometricsCollected Papers of Clive W. J. Granger, pp. 472 - 496Publisher: Cambridge University PressPrint publication year: 2001
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