Consider the following linear trend models estimated from 10 years of quarterly data with and without seasonal
Question:
Consider the following linear trend models estimated from 10 years of quarterly data with and without seasonal dummy variables d1, d2, and d3. Here, d1 = 1 for quarter 1, 0 otherwise; other dummy variables are defined similarly.
Model 1: ŷ = 62.00 + 0.49t
Model 2: ŷ = 62.00 + 0.69t − 0.36d1 − 0.43d2 − 0.12d3
Use each model to make a forecast for y for the first and the fourth quarters of the 11th year.
Use each model to make a forecast for y for the first and the fourth quarters of the 11th year.
Note: Round your answers to 2 decimal places.
Which is the preferred model for forecasting if, relative to Model 1, Model 2 has higher R2 but lower adjusted R2?
An introduction to management science quantitative approaches to decision making
ISBN: 978-1111532222
13th edition
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey Cam