ASSESSING THE HISTORICAL ACCURACY OF REGIONAL ECONOMIC FORECASTS

This study addresses for the first time systematic evaluation of a wid ely used class of forecasts, regional economic forecasts. Ex ante regi onal structural equation model forecasts are analysed for 19 metropoli tan areas. One- to ten-quarter-ahead forecasts are considered and the seven-year sample spans a complete business cycle. Counter to previous speculation in the literature, (1) dependency on macroeconomic foreca sting model inputs does not substantially erode accuracy relative to u nivariate extrapolative methodologies and (2) stochastic time series m odels do not on average, yield more accurate regional economic predict ions than structural models. Similar to findings in other studies, cle ar preferences among extrapolative methodologies do not emerge. Most g eneral conclusions, however, are subject to caveats based on step-leng th effects and region-specific effects.