ABSTRACT
The previous chapter examined the specification and estimation of a particular version of the consumption function, one of the many econometric equations in a typical macroeconomic model. The conclusion drawn from the interplay of theory, data and judgement analysed was that the foundations of an econometric model are sunk not just in the analytic insights of economic theory and the observed regularities of economic data, but also in the shared standards and conventions of economists. In this chapter this argument is extended to include not just the specification of econometric equations but also their use in econometric forecasting. The chapter thus makes one major claim: economic forecasts are not extrapolations of the past into the future, but considered judgements about what is most likely to happen.
