Comparison Between ARIMA Model and OLS Model Based on the Economic Representation

Abstract

This paper investigates the comparison between Autoregressive Integrated Moving Average (ARIMA) model and Ordinary Least Square (OLS) model. As two good ways to deal with time series datas, these two methods have been widely used in the economic world. Based on these phenomenon, it has a significant research value in the field of finance. Since ARIMA model and OLS model are fit the historical datas and make prediction, it is important to know about the charateristics of them. In this paper, basic information of ARIMA model and OLS model are mainly discussed, including the definition, modeling process and summary of the main protries. Then, the paper will do comparison from three parts: applicable data types, treatment of errors, validity. And it is concluded that both models take a good fitting effects. Finally, this paper derives the practical applicability of ARIMA and OLS models to be provided to research members as a reference.