FORECASTING EXPONENTIAL AUTOREGRESSIVE MODELS OF ORDER 1

Abstract
Exact forecasting of the non‐linear EXPAR(1) model for several steps ahead involves a sequence of numerical integrations, thus motivating the search for reasonable approximations. A method based on the assumption of approximately normal forecast errors is shown to give forecasts which perform well in both qualitative and numerical comparisons with two alternative approximations based on naive extrapolation and linearization of the autoregression function.

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