Modeling Trend
- Model 1: Trendt is a simple linear function of time
Trendt = β0 + β1TIMEt - Model 2: Trendt is a quadratic function of time
Trendt = β0 + β1TIMEt + β2TIME2 - Model 3: Trend of Constant Growth
Trendt = β0 eβ1TIMEt
Estimating Trend Models
Forecasting Models
Akaike and Schwarz Criteria
- Mean Squared Error (MSE)
- R2 and Mean Squared Error
- Penalizing Degrees of Freedom