For this exercise, you will need to download quarterly Personal Consumption Expenditures: Chain-type Price Index (PCECTPI) from FRED. The variable PCECTPI is the price index for personalconsumption expenditures from the U.S. National Income and Product Accounts. In this exercise, you will construct forecasting models for the rate of inflation based on PCECTPI. For the analysis, youwill use the sample period 1963:Q1-2019:Q4, but data before 1963 may be used, as necessary, as initial values for lags in regressions.a. Compute the inflation rate, Infl, = 400 x [In(PCECTPI) - In(PCECTPI-1)]. What are the units of Infl? (Is Infl measured in dollars, percentage points, percentage per quarter, percentageper year, or something else? Explain.)b. Compute the first four autocorrelations of AInfl. Estimate an AR(2) model for AInfl. Present you results.c. Forecast AInfl2020:Q1, the change in inflation from 2020:Q1 to 2019:Q4.d. Forecast Infl2020:02, the change in inflation from 2020:Q2 to 2020:Q1 (Use an iterated forecast).e. Forecast Infl2020:22. the rate of inflation in 2020:Q2.

a. Compute the inflation rate, InflThe inflation rate is calculated as the quarterly change in the…

Answered: For this exercise, you will need to…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 2.1CE

See similar textbooks

Similar questions

A researcher has a sample of 6 annual observations {94, 104, 102, 99, 111 and 107} for the CPI in country Z for the period 2015 to 2020, and wants to forecast CPI for the years 2021, 2022 and 2023. The researcher uses 3 different forecasting models: A, B and C. Model A is an AR(1) model with no drift and with an estimated autoregressive coefficient = 0.7. Model B is a MA(1) model with no constant and with an estimated MA coefficient = -0.4 (note the minus !). Model C is a random walk model with no drift. The error terms over the 2015-2020 period were estimated to have the values: {3, -1, 2, 4, -3, 1}. a. Compute the 2021, 2022 and 2023 forecasted values for the consumer price index based on the three models. Show the formulas and the details of your calculations, and explain all the related symbols. b. Suppose that the actual values of the CPI over the 2021, 2022 and 2023 were {108, 114, 105}. Calculate the Root mean square error of the three model forecasts over the 2021-2023…
The unemployment rate in a certain country was dropping at a constant rate of 0.2% (= 0.002, in decimals) between 2009 and 2019. In 2012, the unemployment rate was 3.5%.Let t be the number of years since 2009 and let U(t) be the unemployment rate at year t.(a) Find a formula for the function U. (Hint: use decimals in place of percentages.)U(t) =(b) Assuming the model is valid for a couple of more years after 2019, calculate the expected unemployment rate in year 2021. Enter your answer as a percentage.
A local moving company has collected data on the number of moves they have been asked to perform over the past two years. Moving is highly seasonal, so the owner/operator, who is both burly and highly educated, decides to apply the multiplicative seasonal method to forecast the number of customers for the coming year. The equation for the trend line of yearly sales is Ft = 16 + 60t. Please forecast demand for each quarter in Year 3. (Round the forecasts to whole numbers and show all calculations). Complete the table below and forecast the sales of Year 3 by quarter. Year 1 Year 2 Year 3 Quarter Demand Seasonal Index Quarter Demand Seasonal Index Average Seasonal Index Forecast 1 20 1 27 2 40 2 45 3 45 3 55 4 31 4 41 Total Average
Using the trend adjusted projected method and given the following S15-0.991 T15x 115=5.33+(0.01387)t The forecast demand for period 15?
The Carbondale Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the past 5 years are as follows: Year Mileage 1 3,050 a) Using a 2-year moving average, the forecast for year 6 = miles (round your response to the nearest whole number). b) If a 2-year moving average is used to make the forecast, the MAD based on this = miles (round your response to one decimal place). (Hint: You will have only 3 years of matched data.) c) The forecast for year 6 using a weighted 2-year moving average with weights of 0.45 and 0.55 (the weight of 0.55 is for the most recent period) = miles (round your response to the nearest whole number). The MAD for the forecast developed using a weighted 2-year moving average with weights of 0.45 and 0.55 = d) Using exponential smoothing with a = 0.20 and the forecast for year 1 being 3,050, the forecast for year 6 = miles (round your response to one decimal…
To study the determinants of growth across the countries in the world, researchers have used country level observations averaged over long periods of time (e.g. averaged over 1960- 2000). Some of these studies have focused on the effect that inflation has on growth and found that although the effect is small for a given time period, it accumulates over time and therefore has an important negative effect. (a) Explain why the OLS estimator may be biased in this case. (b) Some authors have suggested using an index of the Central Bank Independence as an instrumental variable. Discuss whether or not such an index would be a valid instrument (discuss both relevance and exogeneity; note that instrumental validity is more of an economic rather than econometric concept
Questions 6 & 7: A model for the Consumer Price Index (CPI) for the period July 2005 (t = 0) to March 2006 (t = 8), where t is in months, is given by the function, (t) = 0.06t³ -0.8t² +3.1t + 195 Use the model to answer Questions 6 and 7 below.
Let p(t) represent the consumer price index. If the rate of inflation of the price index is constant at 5% (i.e., = 5%), and the price index has a base value of 100 at time t = 0, solve for the expression showing Р the consumer price index as a function of time. Sketch the time path of p(t).
Comprehensively state the criteria and process of selecting appropriate models for time series forecasting.
MULTIPLE CHOICE Let yt = 12.50 be the natural logarithm of Real GDP in year t. Suppose that gt = 12.45 is the trend for yt in year t. Then: (1) the cyclical component of Real GDP in year t is 5%. (2) the cyclical component of Real GDP in year t is −5%. (3) the cyclical component of Real GDP in year t is 0.05%. (4) the cyclical component of Real GDP in year t is −0.05%.
You have collected data for the 50 U.S. states and estimated the following relationship between the change in the unemployment rate from the previous year (Aur) and the growth rate of the respective state real GDP (gy). The results are as follows: R² = 0.36, SER=0.78 Aur=2.81-0.23xgy (0.12) (0.04) Assuming that the estimator has a normal distribution, the 95% confidence interval for the slope is approximately the interval: OA. [2.57, 3.05]. OB. [-0.31, 0.15]. OC. [-0.31, -0.15]. OD. [-0.33, -0.13].
Plot the logarithm of arrivals for each transportation mode against time, all on the same graph. Which now appears to be growing the fastest?

SEE MORE QUESTIONS

Recommended textbooks for you

Managerial Economics: Applications, Strategies an…

Economics

ISBN:

9781305506381

Author:

James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:

Cengage Learning