Trend-cycle decomposition

Updated: Aug 20, 2021

An approach to the analysis of time-series data where a long-term movement, or trend, is separated from the variation over shorter periods, usually associated with business cycles, and from the seasonal component. This approach is based on the idea that the long-term and the short-term changes in economic variables are driven by different forces. The outcome of the trend-cycle decomposition is sensitive to the choice of the econometric model.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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