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You Have Decided to Analyze the Year-To-Year Variation in Temperature

question 11

Essay

You have decided to analyze the year-to-year variation in temperature data.Specifically
you want to use this year's temperature to predict next year's temperature for certain
cities.As a result, you collect the daily high temperature (Temp)for 100 randomly
selected days in a given year for three United States cities: Boston, Chicago, and Los
Angeles.You then repeat the exercise for the following year.The regression results are as
follows (heteroskedasticity-robust standard errors in parentheses): TemptBOS^=18.19+0.75×Tempt1BOS;R2=0.62,SER=12.33\widehat { \operatorname { Temp } _ { t } ^ { B O S } } = 18.19 + 0.75 \times \operatorname { Temp } _ { t - 1 } ^ { B O S } ; R ^ { 2 } = 0.62 , S E R = 12.33
(6.46)(0.10)(6.46)(0.10)

TemptCHI^=2.47+0.95×Tempt1CHI;R2=0.93,SER=5.85(3.98)(0.05)\begin{aligned}\widehat{\operatorname{Temp}_{t}^{C H I}}= & 2.47+0.95 \times \operatorname{Temp}_{t-1}^{C H I} ; R^{2}=0.93, S E R=5.85 \\& (3.98)(0.05)\end{aligned}

 Temp tLA^=37.54+0.44× Temp t1LA;R2=0.18, SER =7.17\widehat { \text { Temp } _ { t } ^ { L A } } = 37.54 + 0.44 \times \text { Temp } _ { t - 1 } ^ { L A } ; R ^ { 2 } = 0.18 , \text { SER } = 7.17
(15.33)(0.22)(15.33)(0.22) (a)What is the prediction of the above regression for Los Angeles if the temperature in the
previous year was 75 degrees? What would be the prediction for Boston?

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