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Do Economic Restrictions Improve Forecasts?
Published online by Cambridge University Press: 28 April 2015
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.
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- Copyright © Southern Agricultural Economics Association 2004
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