Do production managers predict turning points? A directional analysis

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This study evaluates the directional accuracy of production managers' forecasts by using a new market-timing test. By extending the directional analysis to the 4 × 4 case, this study investigates whether Japanese production managers' forecasts correctly predict turning points in production across different industries. This fills a gap in the literature that focused on predicting increase/decrease or acceleration/deceleration using directional analysis of the 2 × 2 case. It also illustrates its merit over the 2 × 2 case. This study shows that majority of the forecasts are not useful in predicting turning points in production; however, they are useful in predicting increase/decrease in production. Our findings suggest that the production managers' forecasts serve as early qualitative information of expansion and contraction on the Japanese economy and their accuracy does not differ by phases of business cycles.

Original languageEnglish
Pages (from-to)1-8
Number of pages8
JournalEconomic Modelling
Volume58
DOIs
Publication statusPublished - 2016 Nov 1
Externally publishedYes

Keywords

  • Directional analysis
  • Forecast evaluation
  • Market-timing test
  • Multi-horizon forecast

ASJC Scopus subject areas

  • Economics and Econometrics

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