State an advantage and a disadvantage of differencing versus

State an advantage and a disadvantage of differencing versus detrending a time series process.

Solution

Eliminating the the trends is one of the method to make the time series stationery . Other method is taking the differences

An advantage of differencing over detrending is that no parameters are estimated in the differences operation.

So calculation per se it is easier as we do not have to estimate the parameters

A disadvantage is  if you want to utilize an estimate of the trend at some point anyways , you have to estimate the parameters. So differencing ultimately ends up at same level of efforts.

However, if the goal is simply to coerce the data to stationarity, differencing may be more appropriate.