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When using a Hodrick- Prescott filter to de-trend a time series, it is best practice to...

When using a Hodrick- Prescott filter to de-trend a time series, it is best practice to ignore the first and last number of observations. This rule should always be followed. Is this True, False, Uncertain, briefly explain it.

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True. It is best to remove the end points while using the Hodrick Prescott filter. This is because the output of the HP filter becomes biased at the first and the last observation and thus becomes unreliable. This is known as end point bias and can be rectified by extending the series with ARMA forecasts.

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