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What is diagnostic checking? Why is it important for economic modeling?

What is diagnostic checking? Why is it important for economic modeling?

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Ans) Diagnostic checks is a standard tool for identification of models and have been used before forecasting the data.

Diagnostic checking is important for economic modelling because any modelling procedure has two stages: producing a model, then checking the model for exactness (some of the time called diagnostics). The analytic advance is significant on the grounds that a model is just helpful to the degree that it precisely reflects the connections that it indicates to portray. Making and diagnosing a model is habitually an iterative procedure in which the model is changed (and ideally improved) with every cycle of analysis and respecification. When an agreeable model is discovered, it ought to be twofold checked by applying it to an alternate informational index.

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