Simple linear trend model

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Simple linear trend model

An extrapolative statistical model that asserts that earnings have a base level and grow at a constant amount each period.

Simple Linear Trend Model

A way to predict a trend by taking a previous statistic and plotting out its future movement on the assumption that its growth rate remains the same. For example, if one is estimating a country's GDP according to a simple linear trend model, one takes the previous GDP growth rate (say 3% or -1%) and extrapolates the GDP indefinitely. The problem with simple linear trend models is the fact that many statistics simply do not grow or shrink at the same rate at all times.
References in periodicals archive ?
These methods revealed that the simple linear trend models (including the discrete jump linear trend model estimated above) were poor representations of the data.
The first significant departure from the simple linear trend model described by equation 2 is that log GDP can be additively decomposed into a trend component [[tau].
Developments in the field of econometrics during the 1980s called into question the usefulness of the simple linear trend model for policy analysis.