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Do Economic Restrictions Improve Forecasts?

Published online by Cambridge University Press:  28 April 2015

Elizabeth Murphy ,
Bailey Norwood  and
Michael Wohlgenant
Elizabeth Murphy
Affiliation:
Department of Agricultural and Resource Economics, North Carolina State University, Raleigh, NC
Bailey Norwood
Affiliation:
Department of Agricultural Economics, Oklahoma State University, Stillwater, OK
Michael Wohlgenant
Affiliation:
Department of Agricultural and Resource Economics, North Carolina State University, Raleigh, NC
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Abstract

A previous study showed that imposing economic restrictions improves the forecasting ability of food demand systems, thus warranting their use even when they are rejected in-sample. This article evaluates whether this result is due to economic restrictions enhancing degrees of freedom or containing nonsample information. Results indicate that restrictions improve forecasting ability even when they are not derived from economic theory, but theoretical restrictions forecast best.

Keywords

demand systemseconomic restrictionsforecastingrepresentative consumerB4C1C3C5
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 36 , Issue 3 , December 2004 , pp. 549 - 558
Copyright
Copyright © Southern Agricultural Economics Association 2004

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