An Estimated Second-Order Autoregressive Model for Average Mortgage Rate Is $\hat { \gamma } _ { t } = - 2.5 + 1.8 y _ { t - 1 } - .5 y _ { t - 2 }$

question 107

Essay

An estimated second-order autoregressive model for average mortgage rate is: $\hat { \gamma } _ { t } = - 2.5 + 1.8 y _ { t - 1 } - .5 y _ { t - 2 }$ .If the average mortgage rate in 2003 was 7.0,and in 2002 was 6.5,the forecast for 2004 is ____________________,and for 2005 is ____________________.

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