A Course in Economic Forecasting: Rationale and Content

According to Siegfried et al. (1991, 199), most economists agree that the goal of an economics education is to enable students to “think like an economist,” which involves using deductive reasoning, problem-solving skills, and creative thinking in conjunction with simplified models to understand economic events. When economic thinking is applied to the real world, it almost always involves a prediction of events based on past data and model assumptions. Formalizing the process of prediction into a semester-long forecasting course would benefit the student’s ability to think like an economist and assure increased attention to realworld applications in economics. A formal forecasting course is not a traditional part of the economics curriculum. According to Hanke and Weigand (1994), only 17 percent of institutions that they surveyed offered a formal forecasting course in the economics department. Yet there are many reasons to offer a forecasting course as an elective in the economics curriculum. Not only does such a course prepare students to perform an important function in most companies, but it also complements other courses in the curriculum and provides a real-world context for econometrics and statistics. Sometimes economics departments believe that forecasting is covered adequately by forecasting applications in statistics, time-series, or econometrics classes. Although these applications are helpful, this limited exposure to the forecasting process is not enough preparation for students to be able to do a good job forecasting in a corporate context. A semester-long course, which covers both the forecasting process and the techniques, is needed to prepare students adequately in this important area. In this article, we seek to show why an economic forecasting course is an important part of the economics curriculum and what should be taught in such a class.