Learn about how to assess the accuracy of a real world forecast.
- [Narrator] I'm in the 04_02_Begin file…from the exercise files folder.…Now that we've developed the regression analysis…and put together some binary variables…representing fixed effects across our data set,…it's time to go through and make a forecast.…If you recall, Ed the economist is trying to forecast…REIT flows and the impacts…that different economic variables will have…on flow of funds into and out of REITs.…
So we'd like to use the data that he has gathered…between the year 1986 and the year 2012…to make that forecast.…To do this, we're going to use the regression…that we developed last time.…So I'm going to start by setting up…what this forecast is going to look like.…I'm going to label cell O1 "Forecast"…and place my variables into the cells below.…
Doing that will look something like this…and then I'm going to have my forecasted REIT flow…in cell O2.…Now from here, we need to add in our coefficients.…To do that, I'm going to copy and paste them…from our regression below…into the space above.…Our forecasted REIT flow of course doesn't have…
Professor Michael McDonald demonstrates how to harness the wealth of information available on the Internet to forecast statistics such as industry growth, GDP, and unemployment rates, as well as factors that directly affect your business, like property prices and future interest rate hikes. All you need is Microsoft Excel. Michael uses the built-in formulas, functions, and calculations to perform regression analysis, calculate confidence intervals, and stress test your results. He also covers time series exponential smoothing, fixed effects regression, and difference estimators. You'll walk away from the course able to immediately begin creating forecasts for your own business needs.
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- Identify a good source of free data.
- Name the term for the estimate of the impact of an X variable on a Y variable.
- Tell which statistic offers a bounds on the estimate of the impact of an X variable on a Y variable.
- Assess the type of variable that can be used to capture fixed effects.
- Cite the method by which a forecast can be done with a regression.