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Using a Decision Support Framework to Evaluate Forecasts
Author(s) -
Park Wayne I.,
Garcia Philip,
Leuthold Raymond M.
Publication year - 1989
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1093/aepp/11.2.233
Subject(s) - sample (material) , forecast error , consensus forecast , econometrics , computer science , operations research , actuarial science , economics , mathematics , chemistry , chromatography
Abstract The paper examines the relationship between statistical measures of forecast accuracy and decision support for determining the most useful forecast method. A decision framework is examined with forecasts used to guide trading decisions of a hog producer, buyer and speculator in the hog market. Out‐of‐sample forecasts from various models are evaluated using mean square error and returns from trading decisions under risk‐efficiency criteria. The results emphasize the importance of evaluating forecasts within specific decision‐making situations.