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Introductory Econometrics 4th Edition by Jeffrey Wooldridge
Edition 4ISBN: 978-0324660609Introductory Econometrics 4th Edition by Jeffrey Wooldridge
Edition 4ISBN: 978-0324660609 Exercise 21
Use CONSUMP.RAW for this exercise.
(i) Let yt be real per capita disposable income. Use the data through 1989 to estimate the model
yt = + t + yt-1 + ut
and report the results in the usual form.
(ii) Use the estimated equation from part (i) to forecast y in 1990. What is the forecast error
(iii) Compute the mean absolute error of the one-step-ahead forecasts for the 1990s, using the parameters estimated in part (i).
(iv) Now, compute the MAE over the same period, but drop yt- 1 from the equation. Is it better to include yt- 1 in the model or not
(i) Let yt be real per capita disposable income. Use the data through 1989 to estimate the model
yt = + t + yt-1 + ut
and report the results in the usual form.
(ii) Use the estimated equation from part (i) to forecast y in 1990. What is the forecast error
(iii) Compute the mean absolute error of the one-step-ahead forecasts for the 1990s, using the parameters estimated in part (i).
(iv) Now, compute the MAE over the same period, but drop yt- 1 from the equation. Is it better to include yt- 1 in the model or not
Explanation
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Introductory Econometrics 4th Edition by Jeffrey Wooldridge
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