Abstract:

In the present state of the art of econometrics, it is not possible to quantify or validate the relationships sketched at the macro level. Data on certain of the other relationships point in certain directions and so we have some knowledge of how one variable affects another if at times we cannot be very precise about the strength of the effect. In other cases where we have little or no data, we have subjective ideas: if the model reacts particularly sensitively to a hypothesised relationship, we have to feed in different values for the variable in question and take a view about which is most likely. Our present forecasting method is based on the past relationships between rises in consumer expenditure, expenditure on foreign travel and number of inclusive tours. Naturally we monitor continually to refine and if necessary adjust this technique.