Question: Examine the trend in the annual average values of the discount rate for the period 1977-1996. The data are in the file P2_30.XLS. a. Specify

Examine the trend in the annual average values of the discount rate for the period 1977-1996. The data are in the file P2_30.XLS.

a. Specify one or more “promising” autoregression models based on autocorrelations of this time series. Estimate each model with the available data. Which model provides the best fit to given data?

b. Use the best autoregression model from part a to produce forecasts of the discount rate in 1997 and 1998.

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