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 = 143.70 + 1.23t. In addition, quarterly seasonal indices are calculated as S_1 = 0.95, S_2 = 0.97, S_3 = 1.11, and S_4 = 1.15. 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? 5% below 95% above 95% below 5% 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? 85% above 85% below 15% above 15% below 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

a-1)5% below

a-2) 15% above

b) Quarter 1=(143.7+1.23*25)*0.95=165.73

Quarter 2=(143.7+1.23*26)*0.97=170.41

Quarter 3=(143.7+1.23*27)*1.11=196.37

Quarter 4=(143.7+1.23*28)*1.15=204.86

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