Forecasting Cigarette Consumption: The Causal Model Approach

TLDR: The causal model approach to business forecasting attempts to discover, mainly on the basis of economic knowledge, those variables which appear to have influenced the forecast variable in the past, and then estimates by econometric methods the quantitative relationship between the causal and forecast variables as discussed by the authors.

Abstract: The “causal model” approach to business forecasting attempts to discover, mainly on the basis of economic knowledge, those variables which appear to have influenced the forecast variable in the past, and then estimates by econometric methods the quantitative relationship between the causal and forecast variables. Future values of the forecast variable are then obtained by using forecasts of the causal variables in conjunction with the estimated relationship.