Evaluating the role judgment plays in forecast accuracy

Evaluating the role judgment plays in forecast accuracy

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Article ID: iaor19932486
Country: United Kingdom
Volume: 12
Issue: 2
Start Page Number: 81
End Page Number: 92
Publication Date: Feb 1993
Journal: International Journal of Forecasting
Authors:
Keywords: judgement
Abstract:

The majority of model-based forecasting efforts today rely on relatively simple techniques of estimation and the subjective adjustment of the model’s results to produce forecasts. Published forecasts reflect to a great extent the judgement of the forecaster rather than what the model by itself has to say about the future. This paper examines the role judgment plays in the process of producing a macroeconometric forecast. The debate over the use of adjustment constants to alter the statistical results of a model is outlined and in empirical analysis of forecasts generated by the Michigan Quarterly Econometric Model of the U.S. economy is presented using a unique data set which isolates the role of judgment in the forecasting process.

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