How to forecast data with seasonality

  • Jul 26, 2021
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Many times they tell us about the typical prediction models based mainly on linear econometric models that try to explain a variable (explained variable) as a function of another (explanatory variable), such as the relationship between income and consumption of a person. But there are occasions in which none of the linear models in the parameters (linear regression, polynomial regression, exponential, etc.) is useful to make a forecast. For example, tourist flows in a tourist destination are determined by high and low season, so a continuous time series will probably give a non-representative R ^ 2 for the model.

forecast data with seasonality

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The technique is relatively simple, you must add a series of variables that explain seasonality, with a matrix very similar to the matrix of identity, in this way the regression formula will have a series of zeros that will cancel those values ​​and that will consider the ones that cross the matrix of identity. Well, here is an example in excel of a case in which there is a seasonal demand for a series of 24 months so that you can take it as an example.

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Seasonal-linear-regression

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I hope it will be you useful….

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