Question: (2) Consider the following estimated time series regression using the data upto year 2013: APLCt = Bo + BIAPLCt-1+ 1AGDP-1+ . . . + Bq,APLCt-q

(2) Consider the following estimated time series regression using the data

(2) Consider the following estimated time series regression using the data upto year 2013: APLCt = Bo + BIAPLCt-1+ 1AGDP-1+ . . . + Bq,APLCt-q + Qq2GDPt-q2 + Ut Choose the optimal lag lengths for APLC and AGDP using BIC; then make a forecast for PLC in (1,1 ) (2,2) (3,3 4,4) 0.017 0.015 0.013 0.011 Bo (3.204) (2.517) (1.845) (1.358) 0.516 0.676 0.660 0.659 31 (3.930) (4.298) (3.985) (3.951) -0.391 -0.538 -0.514 -0.529 (-2.508) (-3.116) (-2.818) (-2.894) -0.271 -0.263 -0.258 (-1.651) (-1.300) (-1.231) 0.306 0.292 0.340 (1.706) (1.384) (1.525) 0.024 -0.110 (0.141) (-0.522) 0.060 0.166 (0.313) (0.756) 0.240 B4 (1.376) -0.122 (-0.610) BIC -6.903 -6.829 -6.696 -6.595 year 2014 and compute the forecast error based on the following data. Year 2010 2011 2012 2013 2014 PLC 1.059 1.113 1.123 1.108 1.060 GDP 1.483 1.552 1.576 1.647 1.685

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