Consider the following time series. Quarter Year 1 Year 2 Year 3 1 70 67 61...

Consider the following time series.

Quarter	Year 1	Year 2	Year 3
1	70	67	61
2	48	40	50
3	58	60	53
4	79	82	73

(b)Use the following dummy variables to develop an estimated regression equation to account for seasonal effects in the data:

x₁ = 1 if quarter 1, 0 otherwise; x₂ = 1 if quarter 2, 0 otherwise; x₃ = 1 if quarter 3, 0 otherwise.

(c)Compute the quarterly forecasts for next year.

quarter 1 forecast___

quarter 2 forecast___

quarter 3 forecast___

quarter 4 forecast___

Solutions

Expert Solution

quarter 1 forecast = 78-12X1-32X2--21X3

=78-12*(1)-32(0)-21(0)

=66

quarter 2 forecast = 78-12*(0)-32(1)-21(0) = 46

quarter 3 forecast = 78-12*(0)-32(0)-21(1) = 57

quarter 4 forecast = 78-12*(0)-32(0)-21(0) = 78

orchestra answered 2 years ago

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