Is there a Golden Rule?

Fildes, Robert and Petropoulos, Fotios 2015. Is there a Golden Rule? Journal of Business Research 68 (8) , pp. 1742-1745. 10.1016/j.jbusres.2015.01.059

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Abstract

Armstrong, Green, and Graefe (this issue) propose the Golden Rule in forecasting: “be conservative”. According to the authors, the successful application of the Golden Rule comes through a checklist of 28 guidelines. Even if the authors of this commentary embrace the main ideas around the Golden Rule, which targets to address the “average” situation, they believe that this rule should not be applied automatically. There is no universal extrapolation method that can tackle every forecasting problem; nor are there simple rules that automatically apply without reference to the data. Similarly, it is demonstrated that for a specific causal regression model the recommended conservative rule leads to unnecessary inaccuracy. In this commentary the authors demonstrate, using the power of counter examples, two cases where the Golden Rule fails. Forecasting performance is context-dependent and, as such, forecasters (researchers and practitioners) should take into account the specific features of the situation faced.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Uncontrolled Keywords:	Forecasting; Time series; ARIMA; Regression modelling; Forecasting performance; Model specification
Additional Information:	Available online 11 April 2015 PDF uploaded in accordance with publisher's policies at http://www.sherpa.ac.uk/romeo/issn/0148-2963/ (accessed 9.7.15).
Publisher:	Elsevier
ISSN:	0148-2963
Date of First Compliant Deposit:	30 March 2016
Date of Acceptance:	1 January 2015
Last Modified:	30 Nov 2024 14:00
URI:	https://orca.cardiff.ac.uk/id/eprint/72306

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