Forecasting Foreign Currency Exchange Rates for Air Force Budgeting

Abstract

This thesis examines the current method of forecasting foreign currency exchange rates for the annual US Air Force budget. Using 5 methods against the status quo of a center-weighted average, the paper evaluates the absolute percent error (APE) over three time periods extending from Fiscal Year (FY) 1979 to FY 2014. The results strongly indicate that four of the alternative methods outperform over the short term, and one method for all three time periods. Furthermore, a non-parametric comparison of the median APE demonstrates statistical similarities between the four methods over the short term, and allows for the Air Force to choose which method to exercise for future forecasting. Overall, the paper recommends using a private firm s forecasts to decrease the median APE by 3.36% and avoiding $36.1 million opportunity cost.

Open PDF

Document Details

Document Type
Technical Report
Publication Date
Mar 26, 2015
Accession Number
ADA615405

Entities

People

  • Nicholas R. Gardner

Organizations

  • Air Force Institute of Technology

Tags

Communities of Interest

  • Human Systems

DTIC Thesaurus Topics

  • Air Force
  • Budgets
  • Business Administration
  • Computational Science
  • Congress
  • Cost Analysis
  • Delphi Method
  • Department Of Defense
  • Economics
  • Federal Budgets
  • Financial Management
  • Information Science
  • Investments
  • Law
  • Money
  • Surveys
  • United States Government

Readers

  • Atmospheric Science/Meteorology
  • Computational Modeling and Simulation
  • International Relations and European Studies