Forecasting German unemployment Let Ut denote the monthly levels of unemployment in Germany observed over time t=1,,T.
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Forecasting German unemployment
Let Ut denote the monthly levels of unemployment in Germany observed over time t=1,…,T.
You noticed that this time series looks non-stationary, so you decided to take differences, say ΔUt. Furthermore, based on the (P)ACF of ΔUt, you believe that
ΔUt=ϕ1ΔUt−1+ϕ2ΔUt−2+ϵt
Explain how you can use this model to predict the unemployment in levels at time T+3 based on data observed from t=1,…,T.
Related Book For
Statistics for Managers Using Microsoft Excel
ISBN: 978-0133130805
7th edition
Authors: David M. Levine, David F. Stephan, Kathryn A. Szabat
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