Question

Explain the use of econometrics in context with forexasting and policy making by using some suitable hypothetical example?​

Answer 1

Explanation:

This paper reviews the evidence on ex ante and ex post forecasting with econometric models, considering in particular the role of human judgment in improving forecast accuracy. The importance of human judgment in econometric forecasting and the general superiority of ex ante over ex post forecasts provide evidence of model misspecification, which casts doubt on the validity of econometric policy simulations. An inadequate basis for selection among alternative models with differing policy implications undermines further the utility of these models in policy analysis and in testing hypotheses.