Impulse Response Functions

Impulse Response Functions
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In forecasting variables and signal processing, the impulse response function refers to the reaction produced by a dynamic system as it responds to the external disturbance. Normally, both univariate and multivariate models, especially the time series models, are usually significantly hard to interpret. To interpret them, they are subjected to forecasting of their variables. The most persuasive method of forecasting is the use of the impulse response function. Forecasting refers to the prior estimation of variable data of a particular series. Forecasting is commonly used in time-series data. In this sense, we can define impulse response function as a forecast for the evolution of the variable that's assumed to be shocked in a period and not disturbed forever after.
The impulse response function is not only persuasive but als...