DSCI 2710 5th Edition Lecture 5 Outline of Last Lecture I. Descriptive MeasuresOutline of Current Lecture II. Time SeriesIII. TrendIV. Seasonality V. CyclicalVI. Irregular activityCurrent LectureTime Series – the value of a given variable (such as your natural gas usage per month or the costof college tuition per year) usually measured at equal intervals of time such as years, quarters, months, weeks or days – i.e. the value of that variable at a given point in time.Trend (TR) - the long term increase or decrease in a time seriesSeasonality (S) – the increase and decreases that occur in the variable within a calendar year (like the sales of snowmobiles in winter vs. summer or the consumption of soft drinks in summer vs. winter.) You cannot have seasonality or at least cannot analyze for seasonality if you only have annual data – you must have data that in less than annual to analyze for seasonality.Cyclical (C) – the long term movement of the variable about the trend; usually attributed to business and economic cycles (like the boom of the late 90’s and the downturn from late 2000 in till today).Irregular Activity (I) – essentially what we cannot explain by the above three – TR, S, & C. often includes unpredictable events in time – strikes, wars, earthquakes, hurricanes etc.We combine these elements in a multiplicative model (which means we multiply the factors noted above) to explain the value of a variable y at point t in time.The full multiplicative mode including seasonality is yt= (TRt)(St)(Ct)(It)These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Note if we only annual data then Model is yt= (TRt)(Ct)(It) because it has no
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