Suppose you own a business. How might you use the previous 10 years’ worth of monthly sales data to predict next month’s sales?
You wish to test whether the “Permanent income hypothesis” holds. Can you see whether consumption spending is a relatively constant fraction of national income?
You are a financial researcher. You wish to determine whether gold prices lead stock prices, or vice versa. Is there a relationship between these variables? If so, can you use it to make money?
Answering each of these questions requires slightly different statistical apparatuses, yet they all fall under the umbrella of “time series econometrics.”
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