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A Comparative Study of Methods for Long-Range Market Forecasting

  • JS Armstrong

    (The Wharton School - University of Pennsylvania)

  • Michael C. Grohman

    (IBM Corporation - Philadelphia)

The following hypotheses about long-range market forecasting were examined: Hl Objective methods provide more accuracy than do subjective methods. H2 The relative advantage of objective over subjective methods increases as the amount of change in the environment increases. H3 Causal methods provide more accuracy than do naive methods. H4 The relative advantage of causal over naive methods increases as the amount of change in the environment increases. Support for these hypotheses was then obtained from the literature and from a study of a single market. The study used three different models to make ex ante forecasts of the U.S. air travel market from 1963 through 1968. These hypotheses imply that econometric methods are more accurate for long range market forecasting than are the major alternatives, expert judgment and extrapolation, and that the relative superiority of econometric methods increases as the time span of the forecast increases.

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File URL: http://econwpa.repec.org/eps/get/papers/0412/0412010.pdf
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Paper provided by EconWPA in its series General Economics and Teaching with number 0412010.

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Length: 12 pages
Date of creation: 06 Dec 2004
Date of revision:
Handle: RePEc:wpa:wuwpgt:0412010
Note: Type of Document - pdf; pages: 12
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Jacob A. Mincer & Victor Zarnowitz, 1969. "The Evaluation of Economic Forecasts," NBER Chapters, in: Economic Forecasts and Expectations: Analysis of Forecasting Behavior and Performance, pages 3-46 National Bureau of Economic Research, Inc.
  2. J. G. Cragg & Burton G. Malkiel, 1968. "The Consensus And Accuracy Of Some Predictions Of The Growth Of Corporate Earnings," Journal of Finance, American Finance Association, vol. 23(1), pages 67-84, 03.
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