An AR(3) model of inflation yields the coefficients .3, -.25 and .15 for the first three...

 

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An AR(3) model of inflation yields the coefficients .3, -.25 and .15 for the first three lags of inflation, and the constant value is 2.75. If the last three observations in the dataset (starting with the last observation) are 2.5, 3, and 4, then what is the predicted inflation for the next period? An AR(3) model of inflation yields the coefficients .3, -.25 and .15 for the first three lags of inflation, and the constant value is 2.75. If the last three observations in the dataset (starting with the last observation) are 2.5, 3, and 4, then what is the predicted inflation for the next period?

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To predict the inflation for the next period using an AR3 model ... View the full answer