Estimation and Testing of the Putty-Clay Model

Abstract

In this chapter the results will be presented of the empirical testing of the putty-clay model described in chapter 4.5. The line of presentation is the same as in the previous chapter. After the discussion of the necessary discrete-time modifications in section 6.1, section 6.2 presents the stochastic structure of the model and the parameter estimates resulting from fitting the model to the different samples. Section 6.3 presents the results of the analysis of the final form. This chapter is concluded in section 6.4 with a comparison of actual developments with the underlying long-term trends computed from the model. The construction of the expectations and the measurement of the data are not disscussed in separate sections, being (almost) identical to the corresponding procedures for the putty-putty model.