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Noisy Data and Uncertain Coefficients: A Reply

[N]o one (except KSS, as far as I know) has recommended using the bonds approach for forecasting. KSS however, does not reply on a well-founded statistical basis for their forecasting procedure: it is decidedly ad hoc. We are pleased that Herbert has recognized the potential of "the bounds approach for forecasting" as a viable alternative for forecasting. His major concern is with the "ad hoc" nature of our forecasting procedure. This apparent occurs because forecasts generated by the NVM do not come with confidence intervals similar to those placed on forecasts generated by classical regression techniques. We wish to reply.

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Energy Specializations: Energy Modeling – Energy Data, Modeling, and Policy Analysis

JEL Codes: C53: Forecasting Models; Simulation Methods, C58: Financial Econometrics, E37: Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications, E17: General Aggregative Models: Forecasting and Simulation: Models and Applications, L71: Mining, Extraction, and Refining: Hydrocarbon Fuels

Keywords: Noisy data, Uncertain coefficients

DOI: 10.5547/ISSN0195-6574-EJ-Vol10-No1-16

Published in Volume 10, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.