So you have, let's say, a series S you want to estimate. You built a model to estimate S. Let that series be S'. You want at any point in time, S(t)=S'(t). But, over a longer period, you find they are completely off. The model is not that great. Then you find things missing in the model and you add those to it, and you get your new S'', which should now follow S more closely. However, sometimes S'' is off too, even if it is very close. Let's say S'' =S'+A+B+C, and S" does a better job than S'. By keeping track of S, S', S", A,B and C, and looking at a chart graphing them all or running regressions, how can you determine where the difference in S and S" goes? Should you add something else to S", or perhaps one of the A,B,C is missing something??...I am not sure.
2006-08-18
00:53:27
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2 answers
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asked by
Ani
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Other - Business & Finance