The Forecasting Mechanism: A Trial Run to 1975
The main purpose of this chapter is to present an analysis of the performance in forecasting of the various models discussed in earlier chapters. This is done by using each of the four models to predict the pattern of demand in a future year relatively close to the sample period. The year 1975 was chosen, partly because it is a target year for the Cambridge Growth Model which can thus provide useful supplementary information, and partly because it is far enough beyond the last year of the sample period to allow divergence between the models while being close enough to the time of writing to allow some assessment of the realism of alternative projections. The information gleaned from this preliminary comparison can then be used to select appropriate equations for more distinct projections, in particular for 1980.
KeywordsTime Trend Price Elasticity Price Relative Income Elasticity Relative Prex
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