The Distributed Lag Model Relating Orange Juice Prices to the Orlando

question 38

Essay

The distributed lag model relating orange juice prices to the Orlando weather reported in
the text was of the form $$\% C h g P _ { t } = \beta _ { 0 } + \beta _ { 1 } F D D _ { t } + \beta _ { 2 } F D D _ { t - 1 } + \beta _ { 3 } F D D _ { t - 2 } + \ldots + \beta _ { 19 } F D D _ { t - 18 } + u _ { t }$$ (a)Suppose that an agricultural economist tells you that a freeze in December is more
harmful than a freeze in the other months.How would you modify the regression to
incorporate this effect? How would you test for this December effect?

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