- #1

orochimaru

i have problems differentiating these two terms. can anyone give some examples of these two terms? Thanks!

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- Thread starter orochimaru
- Start date

- #1

orochimaru

i have problems differentiating these two terms. can anyone give some examples of these two terms? Thanks!

- #2

EnumaElish

Science Advisor

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This is the first time that I have encountered these specific concepts. If I had to guess, dynamic noise may be something like an AR (autoregressive) error structure; i.e. e(t) = a_{0} + a_{1}e(t-1) + ... + a_{k}e(t-k) where e(s) is the noise term in period s. Observational noise may be the empirical error term that a model estimation might produce, e.g. when estimating the CAPM equation r_{i}(t) = b_{0} + b_{1}r_{m}(t) + u_{i}(t) for asset i, observational noise may be [tex]\widehat {u_i}(t) = r_i(t) - \widehat {b_0} - \widehat {b_1} r_m(t)[/tex]. These are my guesses.

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