The Study of Grey Forecasting in Replacement for Economic Forecasting Model

Abstract

We examine the accuracy of the model with empirical study focusing on regression analysis in econometric model. Then we compare the result from the model and that from the four GM (1, 1) shadow models in grey forecast. To appraise the ability of the forecasting model, we use MAPE (Mean Absolute Percentage Error) to examine the accuracy of the model. We find all the MAPE values are between 10~20, which yield an excellent forecasting ability. Though the values forecasted by 4 GM (1, 1) shadow models are larger than those from the forecasting model built by this research, they are within the scope excellent forecasting ability to prove that we can replace econometric regression forecasting model with grey forecast partially.