Six years of quarterly data of a seasonally adjusted series are used to estimate

Question

Six years of quarterly data of a seasonally adjusted series are used to estimate a linear trend model as T_t^= 194.10 + 1.28t. In addition, quarterly seasonal indices are calculated as S_1^= 0.93, S_2^= 0.87, S_3^= 1.17, and S_4= 1.14. Interpret the first quarterly index. In other words, what is the value of the series in the first quarter as compared to the average? 7% above 93% above 93% below 7% below Interpret the fourth quarterly index. In other words, what is the value of the series in the fourth quarter as compared to the average? 86% below 14% below 14% above 86% above Make a forecast for all four quarters of next year. (Round your answers to 2 decimal places.) Quarter 1 Quarter 2 Quarter 3 Quarter 4

Explanation / Answer

For the given data,

S1 =0.93 and S4 = 1.14

a-1) 7% below (93% - 100% = -7%)

a-2) 14% above (114%-100% = 14%)

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