5.1. Forecast Evaluation It can be argued that well-specified individual equations are pre-requisite for a good macroeconometric model. From the statistical prospective individual equations should exhibit high 2 R with significant coefficients of the variables. However, the statistical accuracy does not necessarily imply a good performance of the model as whole [Ra and Rhee (2005)]. The criterion used to evaluate the performance of the model over the entire sample period is that how the estimated equations are linked to each other with plausible coefficients of the variables and how closely each endogenous variable tracks its corresponding historical data series [Rashid (1981); Ra and Rhee (2005) and Rankaduwa, et al. (1995)].
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