"Economic Forecasting: Some Lessons from Recent Research"
	
David F. Hendry
Nuffield College, Oxford OX1 1NF, UK.

and

Michael Clements
Dept of Economics, University of Warwick, Coventry, CV4 7AL
	

Abstract: This paper describes some recent advances and contributions to our
understanding of economic forecasting.  The framework we develop helps explain the
findings of forecasting competitions and the prevalence of forecast failure.  It
constitutes a general theoretical background against which recent results can be
judged.  We compare this framework to a previous formulation, which was silent on the 
very issues of most concern to the forecaster.  We describe a number of aspects which
it illuminates, and draw out the implications for model selection.  Finally, we discuss the
areas where research remains needed to clarify empirical findings which lack theoretical
explanations.