In This Case, the Granger Causality Statistic Does Not Exceed $\widehat{\ln \mathrm { f }}$

question 17

Essay

In this case, the Granger causality statistic does not exceed the critical value, and hence the conclusion is that the change in the inflation rate does not Granger-cause the unemployment rate. $\widehat{\ln \mathrm { f }}$ _t = 0.05 - 0.31 ΔInf_{t-1
(0.14)(0.07)}
t = 1982:I - 2009:IV, R² = 0.10, SER = 2.4
a. Calculate the one-quarter-ahead forecast of both ΔInf_2010:I and Inf_2010:I (the inflation rate in 2009:IV was 2.6 percent, and the change in the inflation rate for that quarter was -1.04).
b. Calculate the forecast for 2010:II using the iterated multiperiod AR forecast both for the change in the inflation rate and the inflation rate.
c. What alternative method could you have used to forecast two quarters ahead? Write down the equation for the two-period ahead forecast, using parameters instead of numerical coefficients, which you would have used.

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Definitions:

Sales Growth

An increase in the amount of products or services sold by a company over a specific period, often expressed as a percentage.

Retail Chain

A network of retail outlets operated by the same company, offering the same or similar products or services.

Canada

A country located in the northern part of North America, known for its vast landscapes, multicultural population, and bilingual French and English culture.

Mean

The average of a set of numbers, calculated by summing all the numbers and then dividing by the count of the numbers.