Combining Forecasts from Nested Models*

B-Tier
Journal: Oxford Bulletin of Economics and Statistics
Year: 2009
Volume: 71
Issue: 3
Pages: 303-329

Authors (2)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Motivated by the common finding that linear autoregressive models often forecast better than models that incorporate additional information, this paper presents analytical, Monte Carlo and empirical evidence on the effectiveness of combining forecasts from nested models. In our analytics, the unrestricted model is true, but a subset of the coefficients is treated as being local‐to‐zero. This approach captures the practical reality that the predictive content of variables of interest is often low. We derive mean square error‐minimizing weights for combining the restricted and unrestricted forecasts. Monte Carlo and empirical analyses verify the practical effectiveness of our combination approach.

Technical Details

RePEc Handle
repec:bla:obuest:v:71:y:2009:i:3:p:303-329
Journal Field
General
Author Count
2
Added to Database
2026-01-25