Often, the cyclical component of a time series is due to multiyear business cycles. For example, periods of moderate inflation followed by periods of rapid inflation can lead to time
series that alternate below and above a generally increasing trend line (e.g., a time series for
housing costs). Business cycles are extremely difficult, if not impossible, to forecast. As a
result, cyclical effects are often combined with long-term trend effects and referred to as
trend-cycle effects. In this chapter we do not deal with cyclical effects that may be present
Often, the cyclical component of a time series is due to multiyear business cycles. For example, periods of moderate inflation followed by periods of rapid inflation can lead to timeseries that alternate below and above a generally increasing trend line (e.g., a time series forhousing costs). Business cycles are extremely difficult, if not impossible, to forecast. As a result, cyclical effects are often combined with long-term trend effects and referred to astrend-cycle effects. In this chapter we do not deal with cyclical effects that may be present
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