A TOTAL-ENERGY DEMAND MODEL OF QUEBEC - FORECASTING PROPERTIES

In this paper, we specify and estimate a two-levels integrated total energy demand model for the Province of Quebec. The specification of the model has a close relationship with models currently used by Canadian public agencies to perform policy simulations and to make forecasts. The focus of the analysis is on forecasting. Two forecasting experiments are conducted while using within sample data. In the first experiment, we establish one-year forecasts, while in the second the model is solved recursively over the whole sample, which consists of annual data from 1962 to 1990. It is found that the model has good tracking properties and that most of the forecasting errors are random. The forecasting experiments show no significant structural defects of the estimated model as a forecasting tool.