Econ 3342 Assignment 4

Instructions. Please type your answer key before turning it in. Don t forget to include your name and to include every graph/output that is requested in this activity.

  1. Go to and search for the Consumer Price Index series cpiaucsl (Consumer Price Index for All Urban Consumers: All Items in U.S. City Average). This series is available since 1947. Download the data in annual frequency as an EXCEL le. Then import your data into Eviews.
  1. Let yt be the variable cpiaucsl in period t. Create the variable inflation with the formula inflation= 100* yt-yt-1/yt-1 : When creating the variable, make sure that you have not made a mistake in the formula.

    (One way to check whether you have the right formula is to check magnitudes). Show the time series for the period 1947 - 2017 (paste the graph in your homework).

  2. For the period 1983 - 2017 (NOTICE THE PERIOD) create the correlogram for the variable inflation, use 12 lags. Judging by the correlograms discussed in class, which time series model is more likely to describe the time series, an AR(1) or an AR(2) process? Explain.
  3. Irrespective of your answer above, estimate an AR(1) model for inflation for the period 1983 - 2017. Follow the estimating procedures explained in class. Paste your output below.
  4. What is the unconditional mean of inflation, according to the process estimated above?
  5. Assume that the loss function is quadratic (this statement implies that you can use the conditionalmean as the optimal forecast).With your estimated model, provide the optimal 1-step ahead forecast of in ation for year 2017, as well as the optimal 2-step ahead forecast of in ation for year 2019. You can obtain this forecast directly in Eviews. or you can do it by hand if you prefer. If you do it in Eviews, make sure you print the graph of your forecast. Then compare your forecasted values with the realized values of in ation for those 2 years.

+ Submit Your Assignment Here

AssignmentHippo Features

On Time Delivery

Our motto is deliver assignment on Time. Our Expert writers deliver quality assignments to the students.

Plagiarism Free Work

Get reliable and unique assignments by using our 100% plagiarism-free.

24 X 7 Live Help

Get connected 24*7 with our Live Chat support executives to receive instant solutions for your assignment.

Services For All Subjects

Get Help with all the subjects like: Programming, Accounting, Finance, Engineering, Law and Marketing.

Best Price Guarantee

Get premium service at a pocket-friendly rate at AssignmentHippo


Client Review

I was struggling so hard to complete my marketing assignment on brand development when I decided to finally reach to the experts of this portal. They certainly deliver perfect consistency and the desired format. The content prepared by the experts of this platform was simply amazing. I definitely owe my grades to them.

Tap to Chat
Get instant assignment help