This article presents a methodology for decomposing ex ante forecasting error into exogenous variable error, data
revision error, model error and judgement error. This methodology is applied to the forecasts made by the National
Institute in February 1975 and February 1976. The first section describes the methodology including the NIESR
forecasting procedure. Then the NIESR model (with some of its problems) is discussed together with the data used
in the study. The methodology for decomposing the forecasting error to 1975 is applied and a similar analysis
presented for 1976. Some conclusions and a summary complete the article.
Get full access to this article
View all access options for this article.
References
1.
Ash, J.C.K. and Smyth, D.J. (1973), Forecasting the UK Economy, Saxon House/Lexington Books, Mass. USA.
2.
Barker, T.S. (1970), 'Aggregation error and estimates of the UK import demand function' in K. Hilton and D. F. Heathfield (eds), The Econometric Study of the United Kingdom, Macmillan, London.
3.
Bispham, J.A. (1975), 'Appendix: The NIESR Model and its Behaviour' in Renton, G. A. (ed), Modelling the Economy, SSRC/Heinemann Educational Books, London.
4.
Dean, A.J.H. (1976), Errors in National Institute forecasts of personal incomes, inflation and employment, 1965-75, National Institute of Economic and Social Research, No. 78, November 1976.
5.
Haitovsky, Y., Treyz, G. and Su, V. (1974), Forecasts with Quarterly Macro Econometric Models , National Bureau of Economic Research, New York. Studies in Business Cycles, No. 23.
6.
Kennedy, M.A. (1969), How well does the National Institute forecast ?, National Institute of Economic and Social Research, No. 50, 1969.
7.
Ledingham, P.J. (1976), 'Econometric model forecasts in New Zealand: a preliminary assessment', Reserve Bank of New Zealand Research Paper No. 20, June 1976.
8.
Osborn, D.R. (1977), National Institute gross output forecasts: a comparison with US performance, NIESR Discussion Paper No. 1.
9.
Osborn, D.R. and Teal, F. (1976), An analysis of NIESR forecasting error in 1975 , NIESR Discussion Paper No. 2.
10.
Osborn, D.R. and Teal, F. (1977), An analysis of NIESR forecasting error in 1976 , NIESR Discussion Paper No. 6.
11.
Surrey, M.J.C. (1971), The Analysis and Forecasting of the British Economy [with an introduction by G. D. N. Worsmck], Cambridge University Press, Cambridge.
12.
Worswick, G.D.N. (1975), National Institute experience with econometric models, Chapter 3 in Renton, G. A. (ed), Modelling the Economy, SSRC/ Heinemann Educational Books, London.
13.
Worswick, G.D.N. (1975), How well does the National Institute Forecast ? Internal NIESR note, 21 August 1975.
