Advanced Linear Modeling by Ronald Christensen

Author:Ronald Christensen
Language: eng
Format: epub
ISBN: 9783030291648
Publisher: Springer International Publishing

The quality of the predictions goes down markedly after 1980. It is always harder to predict the future than the past, and our model is not particularly effective. Actually, both Figs. 7.6 and 7.7 suggest that the behavior of the series since 1960 may be inconsistent with the previous data. Thus, it is not surprising that the predictions for 1981 to 1987 are not terribly good. Perhaps a better approach would be to analyze only the data from 1960 forward. Unfortunately, 21, or even 28 observations make a rather inadequate database for time series analysis.

In general, our only hope for prediction is that the future will behave like the relevant past. If there is no relevant past or if we include the irrelevant past, as we may have in this example, we are left to swim in the oceans of uncertainty, or worse, to follow random paths in the deserts of decision making that lead nowhere but give the illusion of progress. (Ok, ok, I’ll take my tongue out of my cheek now.)

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