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|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://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: (Caroline Wise)
If references are entirely missing, you can add them using this form.