Business Intelligence

The Mysteries Of Trend

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Executive Summary

Trends are ubiquitous in economic discourse, they figure prominently in media commentary, they play a role in much economic theory, and they have been intensively studied in econometrics for three decades. Yet the empirical economist, forecaster, and policy maker have little guidance from theory about the source and nature of trend behavior. They have even less guidance about practical formulations, and they are heavily reliant on a limited class of stochastic trend, deterministic drift, and structural break models to use in applications. A vast econometric literature has emerged but the nature of trend remains elusive.

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