Analysis of data for an autoregressive forecasting model produced the following tables. The forecasting model is __________.
A)yt = 3.745787 + 0.082849yt-1 + 0.035709yt-2
B)yt = 3.85094 + 0.70434yt-1 - 0.62669yt-2
C)yt = 0.84426 - 1.66023yt-1 + 14.65023yt-2
D)yt = 0.34299 + 0.13822yt-1 + 9.69yt-2
E)yt = 0.34299 + 0.13822yt-1 - 6.69yt-2

Question

Analysis of data for an autoregressive forecasting model produced the following tables.   The forecasting model is __________.
A)yt = 3.745787 + 0.082849yt-1 + 0.035709yt-2 
B)yt = 3.85094 + 0.70434yt-1 - 0.62669yt-2 
C)yt = 0.84426 - 1.66023yt-1 + 14.65023yt-2 
D)yt = 0.34299 + 0.13822yt-1 + 9.69yt-2 
E)yt = 0.34299 + 0.13822yt-1 - 6.69yt-2

Quizplus · Accepted Answer

Based on the tables given, the coefficient estimates for lag 1 and lag 2 are both statistically significant at the 5% level. Therefore, a suitable autoregressive forecasting model is required to capture such dynamics and trend. Option B is the only model that includes both lag 1 and lag 2 variables, and the coefficients of those variables are statistically significant at the 5% level. Therefore, option B is the best choice for the autoregressive forecasting model.

Analysis of Data for an Autoregressive Forecasting Model Produced the Following