TABLE 16-13
Given below is the monthly time-series data for U.S. retail sales of building materials over a specific year.

The results of the linear trend, quadratic trend, exponential trend, first-order autoregressive, second-order autoregressive and third-order autoregressive model are presented below in which the coded month for the first month is 0:

-Referring to Table 16-13, you can conclude that the second-order autoregressive model is appropriate at the 5% level of significance.

Question

TABLE 16-13
Given below is the monthly time-series data for U.S. retail sales of building materials over a specific year.
  
The results of the linear trend, quadratic trend, exponential trend, first-order autoregressive, second-order autoregressive and third-order autoregressive model are presented below in which the coded month for the first month is 0:

-Referring to Table 16-13, you can conclude that the second-order autoregressive model is appropriate at the 5% level of significance.

Quizplus · Accepted Answer

To determine which model is appropriate, we need to compare the p-values of the Durbin-Watson test for each model. In this case, the p-value for the second-order autoregressive model is less than 0.05, indicating that it is the most appropriate model at the 5% level of significance. Therefore, option A is the correct answer.

TABLE 16-13 Given Below Is the Monthly Time-Series Data for U.S. Retail