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 = 173.70 + 1.28t. In addition, quarterly seasonal indices are calculated as zeta_1 = 0.98, zeta_2 = 0.90, zeta_3 = 1.07, and zeta_4 =1.14. a - 1. Interpret the first quarterly index. In other words, what is the value of the series in the first quarter as compared to the average? 2% above 2% below 98% below 98% above a - 2. Interpret the fourth quarterly index. In other words, what is the value of the series in the fourth quarter as compared to the average? 14% below 86% above 86% below 14% above b. 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

b)as quarter 1 of 7 th year ; t=6*4+1 =25

hence forecast for quarter 1 =(173.7+1.28*25)*0.98=201.59

forecast for quarter 2 =(173.7+1.28*26)*0.90=186.28

forecast for quarter 4 =(173.7+1.28*28)*1.14=238.88

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