If there are T observations (y_i,x_i)to estimate the lagged regression model y_t = β₀ + β₁x_t_{- 1} + ε_t,what is the actual number of observations used to make the forecast for time period T? A) T - 1 B) T + 1 C) 1 - T D) T

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Quizplus · Accepted Answer

For a lagged regression model with one lagged independent variable, we need one additional observation to make a forecast. Therefore, the actual number of observations used to make the forecast for time period T is T-1.

If There Are T Observations (Yi,xi)to Estimate the Lagged Regression

If There Are T Observations (Y_i,x_i)to Estimate the Lagged Regression