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:
“Your honesty is not to be based either on religion or policy. Both your religion and policy must be based on it. Your honesty must be based, as the sun is, in vacant heaven; poised, as the lights in the firmament, which have rule over the day and over the night.”
—John Ruskin (1819–1900)
“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)
“We black women must forgive black men for not protecting us against slavery, racism, white men, our confusion, their doubts. And black men must forgive black women for our own sometimes dubious choices, divided loyalties, and lack of belief in their possibilities. Only when our sons and our daughters know that forgiveness is real, existent, and that those who love them practice it, can they form bonds as men and women that really can save and change our community.”
—Marita Golden, educator, author. Saving Our Sons, p. 188, Doubleday (1995)