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Academic approach to Forecasting
The gross domestic product (GDP) of the United States from 1993 to 2004 is given in the table below. The numbers are in billions of U.S. dollars.Year GDP ($Billions)1993 6,6571994 7,0721995 7,3981996 7,8171997 8,3041998 8,7471999 9,2682000 9,8172001 10,1282002 10,4872003 11,0042004 11,680
a) Prepare forecasts for the GDP of 2005 using exponential smoothing with smoothing constants of 0.4 and 0.6. (Assume the forecast is $6,650 for 1993)
b) Which of these models has the lowest mean absolute deviation.
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