Solved – Why multiplicative Holt-Winters requires strictly positive data points

exponential-smoothing

I've seen that multiplicative Holt-Winters requires strictly positive data points.
I was wondering why it does not allow zero values?

Best Answer

Because in multiplicative model for Holt Winter trend is calculated as division of two data points rather than subtraction (incase of additive model). Multiplicative model is generally more stable than additive model.