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 = 197.00 + 1.36t. In addition, quarterly seasonal indices are calculated as S^cap_1 = 0.84, S^cap_2 = 0.82, S^cap_3= 1.03, and S^cap_4 = 1.08. 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? 84% below 84% above 16% below 16% 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? 92% above 8% above 8% below 92% below b. Make a forecast for all four quarters of next year. (Round your answers to 2 decimal places.)

Explanation / Answer

a-1) 16 % below

a-2) 8% above

b)quarter 1 =(197+1.36*25)*0.84=194.04

quarter 2 =(197+1.36*26)*0.82=190.54

quarter 3 =(197+1.36*27)*1.03=240.73

quarter 4 =(197+1.36*28)*1.08=253.89

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