On Not Evaluating Economic Models by Forecast Outcomes
Even in scientific disciplines, forecast failures occur. Four possible states of nature (a model is good or bad, and it forecasts well or badly) are examined using a forecast-error taxonomy, which traces the many possible sources of forecast errors. This analysis shows that a valid model can forecast badly, and a poor model can forecast successfully. Delineating the main causes of forecast failure reveals transformations that can correct failure without altering the 'quality' of the model in use. We conclude that judging a model by the accuracy of its forecasts is more like fools' gold than a gold standard.
|Date of creation:||01 Feb 2011|
|Contact details of provider:|| Postal: Manor Rd. Building, Oxford, OX1 3UQ|
Web page: https://www.economics.ox.ac.uk/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:538. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monica Birds)
If references are entirely missing, you can add them using this form.