Methodological issues in forecasting: Insights from the egregious business forecast errors of late 1930

Journal of Economic Methodology 12 (4):517-542 (2005)
This paper examines some economic forecasts made in late 1930 that were intended to predict economic activity in the United States in order to shed light on several methodological issues. We document that these forecasts were extremely optimistic, predicting that the recession in the US would soon end, and that 1931 would show a recovery. These forecasts displayed egregious errors, because 1931 witnessed the largest negative growth rate for the US economy in any year in the twentieth century. A specific question is what led forecasters to make such serious and substantial empirical errors. A second more general issue involves the methodology of forecasting. The 1930 forecasts were sometimes based on explicit analogies with previous serious business cycles. Modern forecasting approaches are based on techniques that may not be recognized as analogies. Using the 1930 forecasts, we examine the implicit?analogy content of forecasts, and what might render such implicit analogies valid or invalid. This 1930 forecast example also resonates beyond the confines of economic methodology because forecasts about the Great Depression are of continuing interest to the profession at large, and we produce a forecast series not previously available.
Keywords No keywords specified (fix it)
Categories (categorize this paper)
DOI 10.1080/13501780500343524
 Save to my reading list
Follow the author(s)
My bibliography
Export citation
Find it on Scholar
Edit this record
Mark as duplicate
Revision history Request removal from index
Download options
PhilPapers Archive

Upload a copy of this paper     Check publisher's policy on self-archival     Papers currently archived: 15,865
External links
Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library
References found in this work BETA

Add more references

Citations of this work BETA

No citations found.

Add more citations

Similar books and articles

Monthly downloads

Added to index


Total downloads

4 ( #404,802 of 1,724,889 )

Recent downloads (6 months)

1 ( #349,126 of 1,724,889 )

How can I increase my downloads?

My notes
Sign in to use this feature

Start a new thread
There  are no threads in this forum
Nothing in this forum yet.