Question

Consider the following time series.

Quarter	Year 1	Year 2	Year 3
1	71	68	62
2	49	41	51
3	57	59	52
4	78	81	72

(a) 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.

= _____?______

(b) Compute the quarterly forecasts for next year.

quarter 1 forecast =____?_____

quarter 2 forecast =____?_____

quarter 3 forecast =____?_____

quarter 4 forecast =____?_____

Answer 1

Quarter	Period	Qtr1	Qtr2	Qtr3	Series
1	1	1	0	0	71
2	2	0	1	0	49
3	3	0	0	1	57
4	4	0	0	0	78
1	5	1	0	0	68
2	6	0	1	0	41
3	7	0	0	1	59
4	8	0	0	0	81
1	9	1	0	0	62
2	10	0	1	0	51
3	11	0	0	1	52
4	12	0	0	0	72

applying multiple regression on above

a)

y^ =77-10x1-30x2-21x3

b)

forecast for 1st qtr of next year =			67
forecast for 2nd qtr of next year =			47
forecast for 3rd qtr of next year =			56
forecast for 4th qtr of next year =			77

answered by: anonymous