Handout: Forecasting

I’ve posted a handout based on something we were discussing in the last class – forecasting, monkeys throwing darts at the stock pages, and the perils associated with predicting the future. Here’s an excerpt:

Many consumers of economic forecasts have, at one time or another, probably thought to themselves: I could do better slinging darts at a spreadsheet.

It’s notoriously difficult to predict economic trends over even a relatively short horizon. Many variables can alter the economy’s performance. For example, few economists crafting a 2005 forecast could have anticipated the surge in energy costs and the supply-chain crunches Hurricane Katrina would cause. But predictions that miss the mark can have real consequences. Forecasts are deployed in everything from setting interest-rate policy to crafting corporate purchasing and hiring plans. [WSJ]

It’s in the sidebar, under ‘Handouts’.

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