A level shift refers to a sudden change in the mean level of a time series, which can indicate a significant alteration in the underlying process generating the data. This type of change can happen due to various factors such as economic events, policy changes, or external shocks that affect the time series, resulting in a new baseline around which the data fluctuates. Recognizing a level shift is essential for effective intervention analysis and modeling structural breaks, as it allows analysts to understand and account for these abrupt changes in their forecasts and evaluations.
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