Forecasting Private Consumption Structure in European Countries: SKIM Model Results and Comparison with other Approaches

This analysis was performed with data from 10 European Union countries in the period 1962-86 and is devoted to the changes in the structure of private consumption with respect to eight commodity groups. We began with eleven different approaches from which we chose four. In turn we then compared them with the SKIM model. A total of 880 equations have been estimated during the period 1962-84 and from that source of information we evaluated the forecasting accuracy for the period 1984-86. The main conclusion is that the Skim model, presented in this paper, generally performs better than the other models considered, (Rotterdam, loglinear, LES, Deaton and Muellbauer, and related models). The paper also analyses the evolution of Private Consumption in 15 European Union countries during the period 1960-2000, in comparison in the USA and Japan.