ECONOMIC-EVALUATION OF COMMODITY PRICE FORECASTING MODELS

Price forecasts are typically evaluated on the basis of statistical cr iteria, such as mean error, mean absolute error, or root mean squared error. An alternative approach for evaluating price forecasts is to an alyze them using economic criteria. Four types of economic criteria ar e applied to five quarterly hog price forecasting models over the peri od 1976:I-1985:IV In general, model evaluations under the different ec onomic criteria are consistent with one another. However, the economic evaluations are not consistent with those found using traditional sta tistical evaluation.