Forecasting Project

321 Forecasting Project

QTR Q rose P Rose P carn U Events Disp. Inc. T

3 11484 4.52 6.98 8.8 40022 790.55 1

4 9348 5.08 5.7 7 36996 953.48 2

1 8429 6.14 8.12 8 34035 908.93 3

2 10079 5.82 7.28 8.9 36597 951.06 4

3 9240 5.46 6.42 8.5 38084 981.53 5

4 8862 5.54 7.32 6.2 35254 1092.41 6

1 6216 7.18 7.52 6.1 33111 1024.54 7

2 8253 6.46 6.98 6.5 36247 1039.39 8

3 8038 5.2 6.26 7 37675 992.37 9

4 7476 5.78 6.4 5.3 34114 1008.32 10

1 5911 7.54 7.3 8.6 30277 1000.29 11

2 7950 7.28 7.2 9 34621 1017.5 12

3 6134 5.64 5.88 9.3 35936 1012 13

4 5868 5.92 6.24 9.8 34151 1035.1 14

1 3160 8.48 7.16 12.3 29967 966.19 15

2 5872 7.38 7.06 12.5 33907 1034 16

A. Regression (see attached sheet)

Q Rose = -10996.61951 + -242.1563241 (P rose) + 694.5969529 (P carn) +

-19.50503806 (U) + 0.449162709 (E) + 1.24899449 (I) + -169.4928993 (T)

B. What is the critical value of t for the regression coefficients at the 5% significance level? Are each of the regression coefficients statistically significantly nonzero at the 5% significance level?

The T calculated values for the regression coefficients are the following:

Intercept -1.190858465

P Rose -0.478793919

P Carn 1.481633437

U -0.115983959

Events 2.692316194

Disp. Inc. 0.261972384

T -1.69479162

The T critical value is 2.262 at the 5% significance level. This value was found by first calculating the degrees of freedom (n-k, or 16-7=9). Then, refer to the T Distribution chart using a 5% significance level.

At this 5% significance interval, only one of the regression coefficients, Events (highlighted in green), is statistically significantly nonzero. It is the only T calculated value (2.692316194) that is greater than the T critical value (2.262).

C. What is the critical value of the F statistic at the 1% significance level and is the overall regression statistically significant? Why?

The critical F value at a 1% significance level is 5.80 [the degrees of freedom in the numerator is 6 (7-1) and the degrees of freedom in the denominator is 9 (16-7)]. The calculated F statistic found in the regression was 15.42422973 (highlighted in green on attached sheet). Because the F statistic (15.42422973) is greater than the critical F value (5.80), it proves that with 99% confidence the regression is statistically significant.

D. What is the point cross price elasticity for the last quarter (t=16)? Show your calculations.