I am trying to forecast tax base (time series) based on 3 variables : tax break, inflows of earnings and economic profits.
I tried to use auto.arima with xreg but I got the error:
No suitable ARIMA model found.
The tax break data is basically all zero's from 2011 to 2013, 2014 is 50,000, 2015 is 75,000 and all the following years it is 100,000. Also, the tax break is like each company gets 100,000$ exemption on its first 100,000$ profit. I really want to know it my model is correct or else how should I model this data? The code is below:
tb = ts(data1$Taxbreak, start = c(2001), frequency = 1)
inflows = ts(data1$`Inflow of earnings`, start = c(2001), frequency = 1)
ep = ts(data1$`Economic Profits`, start = c(2001), frequency = 1)
xreg = cbind(tb, inflows,ep)
colnames(xreg) <- c("taxbreak","inflows", "economic profit")
xreg
B =ts(data1$`GR Tax Base`, start = c(2001), frequency = 1)
Box.test(B, lag = 15, type = "Ljung-Box")#stationary
acf(B)
revfit<-auto.arima(B, xreg=xreg)
tsdisplay(residuals(revfit))
newtb = ts(forecasted1$Taxbreak, start = c(2017), frequency = 1)
newinflows = ts(forecasted1$`Inflow of earnings`, start = c(2017), frequency = 1)
newperep = ts(forecasted1$`Economic Profits`, start = c(2017), frequency = 1)
nnewxreg = cbind(newtb, newinflows, newep)
nnewxreg
fcast <- forecast(revfit, xreg = nnewxreg)
list(fcast)
plot(fcast)
tsdisplay(residuals(fcast))
accuracy(fcast)
This is the data that I used for to get to
revfit<-auto.arima(B, xreg=xreg)
tsdisplay(residuals(revfit))
and I got the error at this step.
Year Taxbreak earnings Profits Tax Base
2001 $0.00 $5,332,463 762 32,222,803,774
2002 $0.00 $5,431,753 808 33,610,875,248
2003 $0.00 $5,643,742 979 30,835,183,333
2004 $0.00 $6,134,432 1,179 36,383,352,174
2005 $0.00 $6,433,098 1,375 48,219,466,667
2006 $0.00 $6,871,455 1,578 59,596,984,211
2007 $0.00 $7,265,704 1,609 60,346,996,997
2008 $0.00 $7,390,580 1,435 61,060,551,948
2009 $0.00 $7,171,789 1,237 64,854,063,604
2010 $0.00 $7,258,068 1,588 60,502,826,855
2011 $0.00 $7,581,240 1,782 61,554,035,336
2012 $0.00 $7,862,034 1,952 68,020,593,640
2013 $0.00 $7,903,139 2,006 75,653,752,650
2014 $1.00 $8,211,705 2,026 77,369,017,668
2015 $1.00 $8,625,298 2,098 73,887,957,597
2016 $1.00 9095703 2288.857 76,386,659,364
for the rest of the code I was planning to use the below data to be my newxreg to forecast the tax base from 2017 to 2020
Year Taxbreak earnings Profits
2017 $1.00 9330906 2,384
2018 $1.00 9566108 2,497
2019 $1.00 9801311 2,575
2020 $1.00 10036513 2,670
2021 $1.00 10271716 2,766
2022 $1.00 10506918 2,861
