How has trade between the United States and the European Union developed? The file EU Imports contains U.S. imports ($ M) from the European Union countries from 1997 to 2012. (Source: Download from the bottom of www.census.gov/foreign-trade/balance/.census.gov/foreign-trade/balance/c5700.htm)
Plot the data and describe what you see. Fit a regression on time (use the variable Year). Plot the residuals vs time (or predicted) and comment on the patterns you see.
Include indicator variables for the months and refit the model. Compare this to the original model. Which do you prefer and why?
Consider breaking the data set up into three different time periods. Where would you choose the breaks, and why? Fit each of these time periods separately and comment on the differences.
Forecast the imports for January of 2013, and compare to the actual value of 28,883.8.