Quantitative Analysis --- S6 Modeling and Forecasting Trend

Modeling Trend

1. Model 1: Trendt is a simple linear function of time
   Trendt = β0 + β1TIMEt
2. Model 2: Trendt is a quadratic function of time
   Trendt = β0 + β1TIMEt + β2TIME2
3. Model 3: Trend of Constant Growth
   Trendt = β0 eβ1TIMEt

Estimating Trend Models

Forecasting Models

Akaike and Schwarz Criteria

1. Mean Squared Error (MSE)
   
2. R2 and Mean Squared Error
   
3. Penalizing Degrees of Freedom