In all instances, the RMSE ratios are greater than or nearly indistinguishable from 1 and, hence, the
naive model outpredicts the factor models.
Table 2 section (c) summarizes the
naive model results for PDC among users.
In the
naive model, the GDP growth forecast is recursively set equal to the average GDP growth rate over the past five years.
To put this in perspective this model was compared with a
naive model based solely on the prior year's production.
The mean absolute percent errors (MAPEs) of the BLS projections and of the
naive model are presented in the following tabulation:
It is also noted that the
naive model produces "backward looking" forecasts, since it utilizes the information in the past history of the actual T-bill rate, [R.
In my view customer-facing organisations such as food retailers go through a number of stages: from having a
naive model to a transactional one, then an enlighted one and finally reaching the nirvana of natural.
Our notion of robustness is that the model consistently lies near the top of performance lists of alternative models and is consistently more successful than models based only on past inflation, such as Atkeson and Ohanian's
naive model.
In particular, Atkeson and Ohanian (2001) present evidence indicating that one-year-ahead inflation forecasts from several NAIRU (nonaccelerating-inflation rate of unemployment) Phillips curves are no more accurate than those from a
naive model that predicts inflation next year will be the same as it had been over the past year.
A
naive model that values the options at a particular point in time doesn't consider the potential future value of those options.
The
naive model produces forecasts having mean square error of .
Moreover, the relatively moderate NT result implies that noise observed in the
naive model when applied to SLPG games cannot simply be attributed to the strategic interaction with other subjects.
