Working paper

On not evaluating economic models by forecast outcomes

Abstract:

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 ...

Publication status:
Published

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Authors

Publisher:
University of Oxford Publisher's website
Series:
Department of Economics Discussion Paper Series
Publication date:
2011-02-01
Paper number:
538
Keywords:
Pubs id:
1143901
Local pid:
pubs:1143901
Deposit date:
2020-12-15