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 6,657
1994 7,072
1995 7,398
1996 7,817
1997 8,304
1998 8,747
1999 9,268
2000 9,817
2001 10,128
2002 10,487
2003 11,004
2004 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.