Describe the three steps of the Box-Jenkins approach for constructing an ARMA mo

Question

Describe the three steps of the Box-Jenkins approach for constructing an ARMA model.

What are some of the problems with this approach, if any?[-2]. You obtain the following sample autocorrelations and partial autocorrelations for a sample of 100 observations: Can you identify the most appropriate time series process for these autocorrelations and partial autocorrelations?

1 2 3 4 5 6 7 8 0.420 0.304 0.032 -0.206 -0.138 0.042 -0.018 0.074
0.632 0.381 0.268 0.199 0.205 0.101 0.0906 0.082

Lag 1 2 3 4 5 6 7 8 acf 0.420 0.304 0.032 -0.206 -0.138 0.042 -0.018 0.074 pacf 0.632 0.381 0.268 0.199 0.205 0.101 0.0906 0.082

Explanation / Answer

The original model uses an iterative three-stage modeling approach:

Seasonality is the most appropriate time series for autocorrelations

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