Decomposition Based On Rates of Change
This is an important technique for all types of time series analysis, especially for seasonal adjustment. It seeks to construct, from an observed time series, a number of component series (that could be used to reconstruct the original by additions or multiplications) where each of these has a certain characteristic or type of behaviour. For example, monthly or quarterly economic time series are usually decomposed into:
- the Trend Component that reflects the long term progression of the series (secular variation)
- the Cyclical Component that describes repeated but non-periodic fluctuations, possibly caused by the economic cycle
- the Seasonal Component reflecting seasonality (seasonal variation)
- the Irregular Component (or "noise") that describes random, irregular influences. It represents the residuals of the time series after the other components have been removed.
An example of statistical software for this type of decomposition is the program BV4.1 that is based on the so-called Berlin procedure.
Kendall shows an example of a decomposition into smooth, seasonal and irregular factors for a set of data containing values of the monthly aircraft miles flown by UK airlines.
Read more about this topic: Decomposition Of Time Series
Famous quotes containing the words based, rates and/or change:
“Few white citizens are acquainted with blacks other than those projected by the media and the so—called educational system, which is nothing more than a system of rewards and punishments based upon one’s ability to pledge loyalty oaths to Anglo culture. The media and the “educational system” are the prime sources of racism in the United States.”
—Ishmael Reed (b. 1938)
“Good government cannot be found on the bargain-counter. We have seen samples of bargain-counter government in the past when low tax rates were secured by increasing the bonded debt for current expenses or refusing to keep our institutions up to the standard in repairs, extensions, equipment, and accommodations. I refuse, and the Republican Party refuses, to endorse that method of sham and shoddy economy.”
—Calvin Coolidge (1872–1933)
“When we have to change our mind about someone, we hold the inconvenience he has caused us very much against him.”
—Friedrich Nietzsche (1844–1900)