Hello everyone,
I am just trying to understand how the Arimax function works, so my
questions are:
1. If I have a univariate time series of sales and sales are dependent
upon, say inflation rates, then my xreg would be inflation rates right?
2. Now is I have historial data on sales (from january 2000 to december
2010) then my xreg argument would be a historical time series of inflation
rates on the same time frame? (from january 2000 to december 2010?)
3. If I want to predit, say 5 years of monthly data (60 periods) using the
exogenous variable (in this particular case inflation rates) then that
means I would have to have a a 60 period forecast of inflation rates and
that would be my newxreg argument?
Any guidance will be greatly appreciated,
Best regards,
Paul