I'm a bit confused about our definition of structural breaks, and the implications we're suggesting here. Couldn't structural breaks actually indicate a change in the fundamentals and underlying markets, and not necessarily a data quality issue? E.g. regimen changes. Why is that not being mentioned?
Thanks
Hello Alex,
So, there are generally two kinds of change in data:
One is an evolutionary change - where the process producing the data slowly changes over time. For example, macroeconomic parameters. But the format remains the same.
Another is a structural break where there is a sudden and unexpected change in the format of the data. So much, so that any tool parsing it might find the new data unintelligible.
Yes, I do understand that there can be grey areas but the latter is what we've tried to cover in this course.