TEach of these three equations is a

TEach of these three equations is a type of difference equation. In its most generalform, a difference equation expresses the value of a variable as a function of itsown lagged values, time, and other variables. The trend and seasonal terms are bothfunctions of time and the irregular term is a function of its own lagged value and ofthe stochastic variable t. The reason for introducing this set of equations is to makethe point that time-series econometrics is concerned with the estimation of differenceequations containing stochastic components. The time-series econometrician may estimatethe properties of a single series or a vector containing many interdependent series.Both univariate and multivariate forecasting methods are presented in the text. Chapter2 shows how to estimate the irregular part of a series. Chapter 3 considers estimatingthe variance when the data exhibit periods of volatility and tranquility. Estimation ofthe trend is considered in Chapter 4, which focuses on the issue of whether the trend isdeterministic or stochastic. Chapter 5 discusses the properties of a vector of stochasticdifference equations, and Chapter 6 is concerned with the estimation of trends in a multivariatemodel. Chapter 7 introduces the new and growing area of research involvingnonlinear time-series models.