BAROMETRIC METHODS

 Barometric methods uses economic indicators as barometer

to forecast trends in business activities . The method was
developed to forecast the general trend in overall economic
activities .
 Leading Indicators – These are the indicators which move up
and down ahead of other related variables . Examples of
leading indicators are new orders for durable goods , new
building permits , enrollment in schools , corporate profits
after tax etc.
 Coincidental Indicators – These are the variables
that move up and down simultaneously with the
economic activity or marketing trades . Examples
of coincidental indicators are personal income ,
industrial production , manufacturing and trade
sales .
 Lagging Indicators – They are the variables that fall
behind other related variables . Example include
outstanding loans , average duration of
unemployment , lending rates for short term loan.
 3- Econometric Method
 An econometric method consist of single equation
regression model or a system of simultaneously equations .
Single equation regressions serves the purpose of demand
forecasting in the case of many commodities but in case of
economic variables due to complex relationships , a single
equation regression model is not appropriate in this case , a
system simultaneously equation is used to estimate and
forecast .
 The economic methods are:
 1) Regression Method
 2) Simultaneous equation method
 The economic methods are:
 1) Regression Method : In regression techniques
of demand forecasting , the analyst estimate the
demand function for a product . In the demand
function , the quality to be forecasted is dependent
variable and the variables that effect determine the
demand are called independent variables . Thus by
regression , we mean determining the value of
unknown variable from the value of now variable .
 2) Simultaneous equation method
 The simultaneous equation method of
demand forecasting estimation of demand of
survival equations , this method also takes
into account the interaction between
dependent and independent variables , the
simultaneous equations method considers
the independence of both dependent and
independent variables .
THANKING YOU