Prediction: The Long and the Short of It

• 成果类型: Article
• 署名作者: Millner, Antony; Heyen, Daniel
• 署名单位: University of California System; University of California Santa Barbara; Swiss Federal Institutes of Technology Domain; ETH Zurich
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20180240
• 发表日期: 2021
• 页码: 374-398
• 关键词: management

摘要

Commentators often lament forecasters' inability to provide precise predictions of the long-run behavior of complex economic and physical systems. Yet their concerns often conflate the presence of substantial long-run uncertainty with the need for long-run predictability; short-run predictions can partially substitute for long-run predictions if decision-makers can adjust their activities over time. So what is the relative importance of short- and long-run predictability? We study this question in a model of rational dynamic adjustment to a changing environment. Even if adjustment costs, discount factors, and long-run uncertainty are large, short-run predictability can be much more important than long-run predictability.