Examlex
The following table shows the annual revenues (in millions of dollars) of a pharmaceutical company over the period 1990-2011. The autoregressive models of order 1 and 2, yt = β0 + β1yt - 1 + εt, and yt = β0 + β1yt - 1 + β2yt - 2 + εt, were applied on the time series to make revenue forecasts. The relevant parts of Excel regression outputs are given below.
Model AR(1):
Model AR(2):
Using the AR(2) model, find the company revenue forecast for 2012.
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