3-9 Why do we include a disturbance term? The disturbance term can capture a number of features We always leave out some determinants of There may be errors in the measurement of y, that cannot be modelled Random outside influences on v, which we cannot moc3-9 Why do we include a Disturbance term? • The disturbance term can capture a number of features: - We always leave out some determinants of yt - There may be errors in the measurement of yt that cannot be modelled. - Random outside influences on yt which we cannot model