ECO220Y1 Chapter Notes - Chapter 19: Autocorrelation
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ECO220Y1 Full Course Notes
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19. 2 extrapolation and prediction: extrapolation: although linear models provide an easy way to predict values of y for a given value of x, it"s unsafe to predict for values of x far from the ones used to find the linear model equation, this is called extrapolating, predicting values far away requires the assumption that the relationship between x and y will not change (not often the case), when the x variable is time, we should be very wary of extrapolation. They may lie on the line that best fits the other data points but this will enhance the r and r2 values: when a high leverage point exists, two regression lines should be fit to the data, one with and one without it, influence: if omitting a point from the data changes the regression model substantially, the point is considered influential.
