Econometrics Suppose you were told that the stochastic compo

Econometrics

Suppose you were told that the stochastic component of the data generating process was zero for everyone. what does that mean and what implications if any does it have for you as an econometrician?

Solution

Answer- It means that data can be forecasted with 0 variance, and a 100% accurate forecast can be given for it.. This means that the data is purely deterministic.