March 2019
Beginner to intermediate
200 pages
4h 41m
English
Content preview from Forecasting With The Theta Method2From the
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2From the 
‐method to a 
‐model
By Dimitrios D. Thomakos and Kostas I. Nikolopoulos
2.1 Stochastic and Deterministic Trends and their DGPs
In our analysis of the properties of the 
‐method, we focus on the general “signal + noise” model, whereas the original time series1 
is decomposed into a “trend” or “signal” or a slowly varying component denoted by 
and a “noise” or “error” or “residual” component denoted by 
. This class of models is very broad and allows for great flexibility in specifying various data‐generating processes (DGPs) on it. Therefore, we start with the following representation:
(2.1)
The particular context of analysis will shape the form that the trend/signal component will take and whether we would be interested in accurately extracting this component or just using a particular ...
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