Structural break
From ACT Wiki
Jump to navigationJump to search
Modelling - forecasting.
A structural break is a sudden, and usually unexpected, change to a key element in a financial model.
Structural breaks can lead to forecasting errors.
- Credit impulse alone is not a sufficient metric
- "a lot of liquidity – or if you will, cash – that the post-pandemic recovery policies created is now sitting idle. This fact is masked if you only consider metrics such as the credit impulse or global money creation, as captured by the change in M2, a metric related to money supply.
- There’s nothing wrong with these measures – they are intended to gauge trends in the availability of credit and money, and they do just that.
- However, in times of great change, or structural breaks as we call them in econometrics, these movements can be deceiving."
- Tamara Basic Vasiljev, Senior Economist, Oxford Economics - The Treasurer, March 2023, p21.
