Deep Learning Quick Reference

Stock and flow

In econometric time series, quantities are often defined as stock or flow. A stock measurement refers to a quantity at a specific point in time. For example, the value of the S and P 500 on December 31, 2008 is a stock measurement. A flow measurement is a rate over an interval of time. The rate the US Stock Market increased from 2009 to 2010 is a flow measurement.

Most often when forecasting, we care to forecast flow. If we imagine forecasting as a specific kind of regression then the first and most obvious reason for our preference for flow is because flow estimates are far more likely to be interpolation instead of extrapolation, and interpolation is almost always safer. Additionally, most time series models have an assumption ...