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The Information Approach to the Evaluation of Input-Output Forecasts

C. B. Tilanus
H. Theil

Abstract

The idea of this article is to use some concepts taken from information theory in order to evaluate the predictive quality of decompostion forecasts. In the present case, the forecast is the input structure of a given industry in a given year which is seen as a forecast of the input structure of that industry in a later year. It is a decomposition forecast because, as is well known in input-output analysis, input coefficients by industries add up t unity. Attention is paid to the predictive achievements of subgroups of input coefficients. The information measures defined are applied to ten input-output tables for the Netherlands, 1948-1957.