Haynes and Henry, 1974

According to Haynes and Henry (1974) in their book on Managerial Economics, "In appraising the basic four-step procedure for forecasting -- constructing a model, estimating the parameters, choosing values for the exogenous variables, and simulating the future -- several possible weak links are obvious. First, there is the possibility of incorrectly specifying the model. ... A second possible weakness relates to any attempt to extrapolate into the future based on past experience. A change in the economy cannot be measured immediately ... A third possible weak link in the procedure involves choice of values for exogenous variables. ... Perhaps the most important positive feature of econometric model forecasting is that it requires the forecaster to completely specify the assumptions underlying his forecasts. ... Another strength of econometric models is their capability for simulation of a great variety of possible environments." (p. 132)

from Haynes, W. W. and W. R. Henry. Managerial Economics: Analysis and Cases (3rd edition). Dallas, TX: Business Publications, Inc., 1974.

appeared in DSS News, June 9, 2002, Vol. 3, No. 12