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Do Economic Restrictions Improve Forecasts?

Author

Listed:
  • Murphy, Elizabeth A.
  • Norwood, F. Bailey
  • Wohlgenant, Michael K.

Abstract

A previous study showed that imposing economic restrictions improves the forecasting ability of food demand systems, thus warranting their use even when rejected in-sample. This study attempts to determine whether this is due solely to the fact that restrictions improve degrees of freedom. Results indicate that restrictions improve forecasting ability even when not derived from economic theory, but theoretical restrictions forecast best.

Suggested Citation

  • Murphy, Elizabeth A. & Norwood, F. Bailey & Wohlgenant, Michael K., 2003. "Do Economic Restrictions Improve Forecasts?," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35075, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saeatm:35075
    DOI: 10.22004/ag.econ.35075
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    File URL: https://ageconsearch.umn.edu/record/35075/files/sp03mu01.pdf
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    References listed on IDEAS

    as
    1. Ashley, R & Granger, C W J & Schmalensee, R, 1980. "Advertising and Aggregate Consumption: An Analysis of Causality," Econometrica, Econometric Society, vol. 48(5), pages 1149-1167, July.
    2. Terry L. Kastens & Gary W. Brester, 1996. "Model Selection and Forecasting Ability of Theory-Constrained Food Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 301-312.
    3. Sawa, Takamitsu, 1978. "Information Criteria for Discriminating among Alternative Regression Models," Econometrica, Econometric Society, vol. 46(6), pages 1273-1291, November.
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    Cited by:

    1. Andrew Muhammad & Richard L. Kilmer, 2008. "The impact of EU export subsidy reductions on U.S. dairy exports," Agribusiness, John Wiley & Sons, Ltd., vol. 24(4), pages 557-574.

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    More about this item

    Keywords

    Demand and Price Analysis;

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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