Prepare a literature review.

Assignment Question

The term paper is composed of two parts: a review of one area of forecasting literature and a project in which you obtain data, make forecasts and interpret your results in the context of the literature that you have read and described. The first of these may be submitted separately, mid-way through the term, if you want feedback; in any event the review is incorporated into the final term paper, which should be written in the form of a journal article or alternatively a professional report.

Your literature review should give a clear and succinct overview of the state of the art in forecasting a particular variable (e.g., real GDP growth, volatility of an asset price, probability that a recession will occur over some time period). The reader should develop a clear understanding of the important contributions to the literature, the problems to be overcome, the variety of models that have been used, and the degree to which accurate forecasts are possible at the present time. Evaluation of this part of the project will also take account of the breadth of the work reviewed, precision of the description of results (including numerical results for comparison of methods), clarity and scope of the overview of the literature that is presented, and quality of exposition, graphics and production of the text. For the original forecasting project, the object is to choose a variable and a reasonable set of horizons at which to forecast, and to use the best possible models to produce the forecasts, characterize their accuracy, evaluate them relative to forecasts in the literature, and give the reader a clear overview of the problem, the approach that you have taken, and performance relative to the state of the art. Evaluation will also take account of the quality of the data analysis, work that went into data set construction, originality, care and thoroughness of interpretation of the results, quality of exposition, graphics and production of the text. The general standard of argumentation is of course an important global factor.

Guideline length: around 12-15 pages single-spaced, very roughly, plus any appendices (e.g. extra tables or graphs not incorporated into text).