Do Economic Restrictions Improve Forecasts?

Elizabeth Murphy, Bailey Norwood () and Michael Wohlgenant

Journal of Agricultural & Applied Economics, 2004, vol. 36, issue 3, pages 549-558

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 evaluates whether this result is due to economic restrictions enhancing degrees of freedom or containing non-sample information. Results indicate that restrictions improve forecasting ability even when not derived from economic theory, but theoretical restrictions forecast best.

Keywords: demand systems; economic restrictions; forecasting; representative consumer (search for similar items in EconPapers)
JEL-codes: B4 C1 C3 C5 (search for similar items in EconPapers)

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Journal of Agricultural & Applied Economics is edited by Jeffrey M. Gillespie

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