Posted: March 23rd, 2022

Economic forecasting- solve using ratio-to-moving average method


Must show all Excel work, answer all parts of the question, and write necessary explanations to earn full points. You have to use Excel to solve this numerical problem (project).

The following table gives monthly data for four years in million tons of consumption of ice cream in a country. Plot the series and comment on the visible seasonality and trend. Estimate the centered moving averages for this monthly series. Plot CMA and comment. Next, estimate the S,I component which only includes seasonal and irregular movements of the series. Then find the seasonal indexes for the twelve months removing the irregular component. Find the de-seasonalized levels for the series. Plot De-seasonalized Y and comment. Then estimate the trend values for the four sample years and the 12 months of the year 2015 using linear regression. Finally, make the forecast for the 12 months of 2015 using the Ratio-to-Moving Average method to capture the Trend and Seasonal patterns, using Excel. Plot the forecasted values for the 60 periods including 12 months of the year 2015. Plot the errors for in-sample periods and calculate RMSE. Comment on the error plot with respect to the existence of pattern or lack of visible pattern.

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