Economic Forecasting

ECO 309

Economic Forecasting

Asli K. Ogunc

Project Part 1 (Proposal)

Upload your work in a Word document to the relevant dropbox in D2L. Minitab output can be in appendix but will not be accepted without the Word document.

1. Identify your company from the company revenue list provided. Download (copy/paste), and your data in MINITAB. The first column should be the dates and second column should be your company revenue. Your data should start with oldest and end in the most recent data available and it should be accurately labeled including the unit. We will call this revenue variable our Y variable. The first page of your assignment will contain the data description which involves the time series plot as well as the summary statistics for the Y variable.

2. To run a “Time Series Plot” in MINITAB follow this sequence fomr the pop-up menu at the top of the screen: Stat>Time Series>Time Series Plot. Pick simple plot from the choices. In the dialog box, tell MINITAB you want the plot for your company revenue data (C2). Copy and paste it to the 1st page of your assignment. On this page also comment on what is happening to your data over time based on the Time Series Plot (Read Chapter 3 pp 100-102 for MINITAB application and pp 76 -81 for understanding TS Plots)

3. Turn in the “Descriptive stats” of your data as the 2nd page of your assignment. From the pop-up menu follow Stat>Basic Statistics> Display descriptive statistics. In the dialog box, tell MINITAB you want the descriptive statistics for your company revenue data (C2). Every picture and number should have explanations. (Chapter 2 pp 56 – 58 for MINITAB application).

4. Copy and Paste at least three macro economics variables from the data set provided in the DocSharing. You should choose micro variables that are consistent with your company revenue.

5. Plot each of the X variables against the Y variable. Follow Graph>Scatter Plot sequence from menu. Pick simple plot from the choices. In the dialog box, tell MINITAB you want the plot for your company revenue data (C2) against each of the variables (you will have to do this one at a time). Copy and paste paste the scatter plots on your Word document. On this page also comment on the relationship between the revenue and the macro variable. Remember: this graph is about relationships, it is NOT time series data so you can NOT talk about trend, seasonality, cycles. You can talk about positive or negative, linear or nonlinear relationship between the two variables. (Read Chapter 2 pp: 34- 37 for better understanding)

6. You have to test formal hypothesis of correlation between the Y variable and the 3 macro variables by Stat> Basic Statistics>Correlation. (Read Chapter 2 pp 30-34 for review of hypothesis testing including using the p-value on pp 32) In the dialog box, you can include Y and all your macro variables at once. Make sure to click “options” tab at the right lower corner to pick “store correlation matrix”. This is the only way to get the p-value associated with the hypothesis testing. Make sure to include the matrix in your word document and test the hypothesis of no correlation for each of the macro variables (Xs) against Y variable.