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 cap = 194.10 + 1.28t. In addition, quarterly seasonal indices are calculated as S cap_1 = 1 0.93, S cap_2 = 0.87. S cap_3 = 1.17, and S cap_4 = 1.14. Interpret the first quarterly index. In words, what is the value of the series in the first quarter as compared other to the average? 93% below 93% above 7% below 7% above Interpret the fourth q index. In other words, what is the value of the series in the fourth quarter as compared to the average? 86% above 86% below 14% above 14% below Make a forecast for all four quarters of next year. (Round your answers to 2 decimal places.)

Explanation / Answer

a-1) 7% below

a-2|)14% above

b)as time period for 1st quarter t=25

hence Quarter 1 =(194.1+1.28*25)*0.93=210.27

Quarter 2 =(194.1+1.28*26)*0.87=197.82

Quarter 3 =(194.1+1.28*27)*1.17=267.53

Quarter 4 =(194.1+1.28*28)*1.14=262.13

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