The Use of Profits as Opposed to Conventional Forecast Evaluation Criteria to Determine the Quality of Economic Forecasts

Using profits to evaluate the quality of forecasts for the 3-month yen certificate of deposit, a profiterror relationship is detected except for the case of the professional forecasts. Professional forecasts generally perform worse in terms of forecast error measures, yet they are still in high demand. The empirical findings suggest that it might be inappropriate to use forecast error measures to judge the quality of professional forecasts and that profit should be included as a judging criteria.