Abstract
A class of time series models is presented in which variables evolve on a data-based rather than calendar time scale. The discrete calendar-time model thus obtained exhibits time-varying parameters and conditional heteroscedasticity. Using a procedure based on the Kalman filter, univariate models are estimated for postwar U.S. real gross national product (GNP) and short- and long-term interest rates. The results indicate significant time scale nonlinearities.