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This paper serves as an introduction to forecast uncertainty in empirical economic modeling. The author defines forecast uncertainty and examines various measures of forecast uncertainty. Also, some sources and consequences of forecast uncertainty are analyzed. These issues are illustrated with the use of sample models with regards to the United States trade balance, United Kingdom inflation and real national income, and the U.S./U.K. exchange rate. This working paper can be found at the United States Federal Reserve Board's International Finance Discussion Papers. You can access it by going to http://www.federalreserve.gov/pubs/ifdp/.

This paper examines predictable uncertainty in economic forecasting and provides an introduction to predictable forecast uncertainty in empirical economic modeling. The study categorizes the sources of both predictable and unpredictable forecast uncertainty. Several analytical models, including static and dynamic models, illustrate the key features of predictable forecast uncertainty. Empirical models of the United States trade account, United Kingdom (U.K.) inflation, and U.K. real national income are used to help clarify the issues involved in this study. This working paper can be found at the United States Federal Reserve Board's International Finance Discussion Papers. You can access it by going to http://www.federalreserve.gov/pubs/ifdp/.