Interpretation of second difference of a predictor

[stats12345]

Hi,

can you please help with this -
If I have a regression equation to predict Y using one of the independent variables which uses the second difference transformation, how can I interpret this in business sense. For instance if I am forecasting GDP of a country using S&P 2nd difference, what is the interpretation in theoretical sense

 

[staassis]

The return on the S&P portfolio is indicative of good or bad things happening to GDP, through market sentiment and such.

 

[stats12345]

the change in absolute changes wouldnt be the return , right

 

[staassis]

Yous said earlier: " using S&P 2nd difference". How is that "the change in absolute changes"? You would need to state clearly what's going on.

 

[stats12345]

by 2nd difference I mean - (xt-xt-1)-(xt-1-xt-2) regressed on yt

 

[staassis]

To some extent, the second difference is measuring whether the companies have generated more casfflows than last year or less.