You Set Out to Forecast the Unemployment Rate in the United

question 14

Essay

You set out to forecast the unemployment rate in the United States (UrateUS), using
quarterly data from 1960, first quarter, to 1999, fourth quarter.
(a)The following table presents the first four autocorrelations for the United States
aggregate unemployment rate and its change for the time period 1960 (first quarter)to
1999 (fourth quarter).Explain briefly what these two autocorrelations measure. First Four Autocorrelations of the U.S. Unemployment Rate and its Change,
1960:I - 1999 IV
$\begin{array}{|c|c|c|}\hline \mathrm{Lag} & \text { Unemployment Rate } & \begin{array}{c}\text { Change of } \\\text { Unemployment Rate }\end{array} \\\hline 1 & 0.97 & 0.62 \\\hline 2 & 0.92 & 0.32 \\\hline 3 & 0.83 & 0.12 \\\hline 4 & 0.75 & -0.07 \\\hline\end{array}$

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