Date of Award

7-14-1953

Degree Type

Master's Essay - Restricted

Degree Name

Master of Business Administration (MBA)

Department

Economics

Abstract

Forecasting has become one of the widely discussed aspects of business cycle theory and policy. It is being alternately criticized and defended at the present time. It is being criticized because of the poor record of past performances and also because there is no specific method of forecasting that can be called assuredly correct and accurate. Although the past record of forecasting is bad, the record has not differentiated the pseudo-scientific methods that have been used, from the newer approaches to forecasting. Forecasting is defended on the grounds that it is unavoidable, for whenever business or government takes any positive action, a forecast is implied in the action. The recently developed methods are a considerable improvement over past methods. Business and government forecasters today usually model their forecasts in some sort of GNP model. One business forecaster said, "The pivotal starting point of economic change is a shift in the spending decisions of one or more of the four major spending decisions of one or more of the four major spending groups; consumers, business, government, and foreign buyers. Successful forecasting must start by evaluating probable changes in the future spending patterns of these four major groups." Forecasting by means of analysis of the GNP models has shown that forecasting can be properly called a science instead of an "art" or "qualified guess" as was its fate during the period preceding World War II. With this in mind I shall present an analysis of the uses and applications of GNP forecasting and an analysis of the results of previous forecasting by means of the GNP models. Also several models have been chosen as examples of this new development in forecasting together with an attempt by the author to forecast the GNP and its components for the last half of 1953, and the first quarter of 1954.

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