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I was using Eviews, and I noticed that there is 'dynamic forecast' and 'static forecast' in the option. But I don't know what is the difference, would any one tell what are they? But I know that both are one-step ahead forecast.

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Check –  user10525 May 25 '12 at 15:48

2 Answers 2

If it is one-step forecast then both forecasts are the same. The difference arises when forecasting further: "dynamic forecast" will take previously forecasted values while ""static forecast" will take actual values to make next step forecast.

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It is right that the one step ahead static and dynamic forecasts are similar. The difference arises because of their estimation procedure. Dynamic forecast uses the value of the previous forecasted value of the dependent variable to compute the next one. On the other hand static forecast uses the actual value for each subsequent forecast.

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