EViews.com

Hi,

I ran automatic ARIMA test on our daily sales data which gave the best model. I tried doing forecasting based on the best model but the standard errors were too large. So, I changed the dependent variables from DLOG(Daily_Units_Sold) to just 'Daily_units_Sold' and the standard errors became normal. Is it because of the log differentiation that it caused the standard errors to inflate so much? If so, then is there a way to normalize the standard errors?

Thank you,

Shehram Sikander

In one case you are predicting the first difference and in the other you are predicting the level.

I agree. However, does taking the dlog of the dependent variable affects the variance so much to the point that it is almost impossible to see the dependent variable in a normal graph. Should I instead go with other top 20 models mentioned in the automatic ARIMA output?