SINCE the end of World XVar II the Norwegian government has published forecasts of next year's values of several macroeconomic variables. These projections, mixed sometimes with plans and targets, are published in January or February of the year to which they refer in an official document called the National Budget. It is the purpose of this paper to evaluate the administrative system that sets up the National Budgets by comparing its forecasting ability with that of other simpler forecasting methods. In order to evaluate a forecasting system some criteria of success must be developed. Such criteria can be derived from the goals which the system has set for it, from comparisons with the results obtained from other countries using different methods or from comparisons with results obtained by different methods applied in the same country. The first method was used by the author and more comprehensively by P. J. Bjerve to study the Norwegian budgeting system.1 The second has been used by the United Nations Economic Commission for Europe and more systematically by H. Theil.' The third method is utilized in this paper. Each method has its advantages and drawbacks. An evaluation based upon absolute rather than comparative standards can locate sources of error and suggest improvements, but it cannot determine whether the whole effort was worth the cost, given what might have been done by other methods. A comparison of the results obtained by different countries is inconclusive unless it can be shown that the difficulty of forecasting and the seriousness of a given error does not vary greatly among the countries comnared. A comnarison of the results of applying different forecasting methods to data obtained from the same country represents an improvement, so long as no more information is utilized than was available to the policy makers at the time they made their forecasts. The conclusions reached by this study suggest that fairly simple, naive methods of forecasting would have done just as well, if not better in some cases, than the National Budgeting system. This conclusion must be modified to recognize that forecasting was only one of the tasks which the budgeting system was meant to accomplish. But it is of significance because this system is in common use as a forecasting tool by governmental organs and businesses throughout the world and because, in Norway, circumstances were particularly favorable for its use.

Two observations are in order before I discuss the topic suggested by the title. First, interest in it forces us to be future oriented, and oriented towards the longerterm future at that. This interest, while arising from a variety of sources, generally involves predictions of growing scarcity of natural resources and environmental carrying capacity, worries about increasing dependence on foreign supplies and concerns about loss of local amenities due to the rapid influx of population into limited regions. It is not sufficient to study past trends when the overriding concern is that the future will not be like the past. Otherwise, we are subject to the criticism of those like E. F. Schumacher who recently suggested that economists spend most of their time optimizing the arrangement of deck chairs on the Titanic. Second, we cannot discuss the effects of population independent of other factors that can cause resource and environmental pressures. While it makes sense to ask about the relative importance of population in causing these pressures, we cannot completely ignore tastes, technology, institutions, policies, and international relations. These and other determinants strongly condition the resource and amenity pressures generated by population growth; they often change and affect the situation more than do demographic changes within specific time periods; and they often interact with each other and with demographic variables. In particular, we cannot set aside changes in per capita output since so many of the problems we are concerned with here are related to the movement of materials through the total economy. These two considerations have led me to focus on three questions: Are there limits to economic imposed by resource exhaustion and environmental pressures? If so, how close are we to these limits? How important is population as opposed to other factors in moving us towards these limits? In discussing these questions I will consider primarily the United States. The first question has significance only if the word growth is taken to mean material economic or in population and material economic output, but not in GNP or national income. Since the latter are artifacts in large part measuring the value placed on the goods and services produced by an economy, they could conceivably continue growing even without any in the amount of materials embodied in these goods and services. Defined in this way, is quite definitely subject to limits. First, there are ultimate or natural limits imposed by the finite character of the earth. Ruling out the possibility of importing materials and energy from outside the earth on an everincreasing scale, the second law of thermodynamics, the entropy law, makes the existence of this limit quite certain (see Nicholas Georgescu-Roegen). Scientific * Program director, Resources for the Future, Inc.

Ronald G. Ridker, John A. Henning, The Determinants of Residential Property Values with Special Reference to Air Pollution, The Review of Economics and Statistics, Vol. 49, No. 2 (May, 1967), pp. 246-257