Question: C18.9 Use CONSUMP.RAW for this exercise. (i) Let y, be real per capita disposable income. Use the to estimate the model y = a +

C18.9 Use CONSUMP.RAW for this exercise. (i) Let y, be real per capita disposable income. Use the to estimate the model y = a + B + SONI data through 1989 SALE OR and report the results in the usual form. (ii) Use the estimated equation from part (i) to forecast y in 1990. What is the forecast error? (iii) Compute the mean absolute error of the one-step-ahead forecasts for the 1990s, using the parameters estimated in part (i). (iv) Now, compute the MAE over the same period, but drop y-1 from the equation. Is it better to include y,-, in the model or not?

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