Question: Use the data in CPI_change_2.xlsx to generate forecasts for changes in the CPI by means of simple exponential smoothing (SES). a. Use the observed value
Use the data in CPI_change_2.xlsx to generate forecasts for changes in the CPI by means of simple exponential smoothing (SES). a. Use the observed value for 1963 as the starting value, and compute the one-step- ahead forecasts for subsequent years for = 0.2, 0.5, and 0.8 in turn. b. Compare the performance for the given values of by calculating the RMSE and MAE over the period 20012015
| observation_date | INFLATION |
| 1/1/1963 | 1.21 |
| 1/1/1964 | 1.31 |
| 1/1/1965 | 1.67 |
| 1/1/1966 | 2.99 |
| 1/1/1967 | 2.78 |
| 1/1/1968 | 4.22 |
| 1/1/1969 | 5.41 |
| 1/1/1970 | 5.9 |
| 1/1/1971 | 4.26 |
| 1/1/1972 | 3.31 |
| 1/1/1973 | 6.22 |
| 1/1/1974 | 11.04 |
| 1/1/1975 | 9.13 |
| 1/1/1976 | 5.74 |
| 1/1/1977 | 6.49 |
| 1/1/1978 | 7.65 |
| 1/1/1979 | 11.27 |
| 1/1/1980 | 13.51 |
| 1/1/1981 | 10.32 |
| 1/1/1982 | 6.16 |
| 1/1/1983 | 3.21 |
| 1/1/1984 | 4.32 |
| 1/1/1985 | 3.56 |
| 1/1/1986 | 1.86 |
| 1/1/1987 | 3.74 |
| 1/1/1988 | 4.01 |
| 1/1/1989 | 4.83 |
| 1/1/1990 | 5.4 |
| 1/1/1991 | 4.23 |
| 1/1/1992 | 3.03 |
| 1/1/1993 | 2.95 |
| 1/1/1994 | 2.61 |
| 1/1/1995 | 2.81 |
| 1/1/1996 | 2.93 |
| 1/1/1997 | 2.34 |
| 1/1/1998 | 1.55 |
| 1/1/1999 | 2.19 |
| 1/1/2000 | 3.38 |
| 1/1/2001 | 2.83 |
| 1/1/2002 | 1.59 |
| 1/1/2003 | 2.27 |
| 1/1/2004 | 2.68 |
| 1/1/2005 | 3.39 |
| 1/1/2006 | 3.23 |
| 1/1/2007 | 2.85 |
| 1/1/2008 | 3.84 |
| 1/1/2009 | -0.36 |
| 1/1/2010 | 1.64 |
| 1/1/2011 | 3.16 |
| 1/1/2012 | 2.07 |
| 1/1/2013 | 1.46 |
| 1/1/2014 | 1.62 |
| 1/1/2015 | 0.12 |
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