Question: There is some evidence that the Lydia Pinkham data may be nonstationary. For example. the sample autocorrelations tend to be large (persist) for several lags.

There is some evidence that the Lydia Pinkham data may be nonstationary. For example. the sample autocorrelations tend to be large (persist) for several lags. Difference the data. Construct a time series plot of the differences. Using Minitab or a similar program, fit an ARIMA(1, 1.0) model to annual sales for 1907 to 1948. Generate one-step-ahead forecasts for the years 1949 to 1960. Which model, AR(2) or ARIMA(1, 1, 0), do you think is better for the Lydia Pinkham data?

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