Re: [Gretl-users] how to set limits on variables values in forecasting?

regression. Sometimes, even if the model is well adjusted to the data, when i try to get forecast for 3 months some of the values are below 0... what can i do to set a limit on that variable? Most likely the model is not as well adjusted as you think. When forecasting an item such as sales it is usually better to forecast the percent sales growth (or equivalently the first different in the log of sales). R2 will be much lower but the forecast standard error is likely to more realistic. The Elements of Forecasting book by Frank Diebold gives guidance on this type of forecasting -- i.e. whether the forecasting model should be in levels or (percent) changes.