An earlier version of this paper, "The Business Cycle and Economic Forecasting," was presented to the Western Economic Association in July 1986, and to the Federal Reserve System Research Committee on Business Analysis in November 1986.Macroeconomic forecasts are traditionally stated as point...

A growing disenchantment with conventional economic models has resulted in increased interest in forecasting with vector autoregressive (VAR) models. In this article, Roy H. Webb develops a statistical procedure for determining the best configuration of explanatory variables in the equations of...