Title

Assessing the historical accuracy of regional economic forecasts

Publication Date

1-1-1996

Publication Name

Journal of Forecasting

Volume

15

Issue

1

First Page

19

Last Page

36

Source Full Text URL

https://doi.org/10.1002/(SICI)1099-131X(199601)15:1<19::AID-FOR602>3.0.CO;2-B

Document Type

Article

DOI

10.1002/(SICI)1099-131X(199601)15:1<19::AID-FOR602>3.0.CO;2-B

Abstract

This study addresses for the first time systematic evaluation of a widely used class of forecasts, regional economic forecasts. Ex ante regional structural equation model forecasts are analysed for 19 metropolitan areas. One- to ten-quarter-ahead forecasts are considered and the seven-year sample spans a complete business cycle. Counter to previous speculation in the literature, (1) dependency on macroeconomic forecasting model inputs does not substantially erode accuracy relative to univariate extrapolative methodologies and (2) stochastic time series models do not on average, yield more accurate regional economic predictions than structural models. Similar to findings in other studies, clear preferences among extrapolative methodologies do not emerge. Most general conclusions, however, are subject to caveats based on step-length effects and region-specific effects.

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