A stochastic trend refers to a non-deterministic movement in a time series that is influenced by random variables, leading to a changing mean over time. This type of trend indicates that shocks or random events have a lasting impact on the level of the series, making it unpredictable and not stationary. Unlike deterministic trends, which can be modeled with fixed patterns, stochastic trends involve inherent uncertainty, reflecting how random fluctuations can alter the trajectory of the data.
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