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 T_t = 144.40 + 1.48t. In addition, quarterly seasonal indices are calculated as S_1 = 0 86, S_2: 0.97, S_3 = 1.01, and S_4 = 1.12. Interpret the first quarterly index. In other words, what is the value of the series in the first quarter as compared to the average? 86% above 14% below 14% above 86% 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? 12% below 12% above 88% above 88% below b. Make a forecast for all four quarters of next year.

Explanation / Answer

Answer:

1). 14% below

2). 12% above

3).

T=144.40+1.48t

t

T

s

y

1

145.88

0.86

125.46

2

147.36

0.97

142.94

3

148.84

1.01

150.33

4

150.32

1.12

168.36

t

y

Q1

125.46

Q2

142.94

Q3

150.33

Q4

168.36

t

T

s

y

1

145.88

0.86

125.46

2

147.36

0.97

142.94

3

148.84

1.01

150.33

4

150.32

1.12

168.36

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