What is structural break
Posted by: admin 1 year, 7 months ago
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In the science of economic and many other knowledge that use statistic, a structural break is an unexpected change over time in the parameters of the regression model. And as the purpose of regression is to forecasething, the structural break which can lead to huge forecasting errors and unreliability of the model in general. This issue was popularised by David Hendry, who argued that lack of stability of coefficients frequently caused forecast failure, and therefore we must routinely test for structural stability.
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