The values of purchasing power for the minimum wage in 1997 dollars for the years 1980 to 1997 are shown in the table. Use these data and exponential smoothing to develop forecasts for the years 1981 to 1997. Use ? = 0.1, 0.5 and 0.8, and compare the results using MAD. Discuss your findings. Select the value of ???? that gave the best result and use the results of exponential smoothing to predict the purchasing power in 1998. Construct a simple index for the purchasing power of wages. Comment on how much it has changed in this period.

Transcribed Image Text:

Purchasing Purchasing power ($) Year Year power ($) 4,86 1980 6.04 1992 1981 5.92 1993 4.72 1982 5.57 1994 4.60 1983 5.40 1989 4.34 1984 5.17 1990 4.67 1985 5.00 1991 5.01 1986 4.91 1995 4.48 1987 4.73 1996 1997 4.86 1988 4.55 5.15