lagged variable analysis

Lagged variable analysis examines how past values of one variable influence current values of another, helping identify delayed effects over time. For example, analyzing how advertising expenditure last month affects sales this month. By incorporating previous data points, the method reveals patterns and relationships that aren’t immediately obvious. This approach is common in fields like economics and finance, where effects often take time to materialize. Essentially, it helps understand the temporal connection between variables, allowing for better prediction and decision-making based on how past activities impact present outcomes.