Question: From Exercise 6, select the time series corresponding to food and gas inflation. Compute the autocorrelation and partial autocorrelation functions. Which time series model(s) would

From Exercise 6, select the time series corresponding to food and gas inflation. Compute the autocorrelation and partial autocorrelation functions. Which time series model(s) would you entertain? Estimate the model and construct the 1-step-, 2-step-, and 3-step-ahead forecasts, their forecast errors, and the uncer-tainty associated with the forecasts. Which series is more difficult to predict?

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We download the inflation rate for food and gas not seasonally adjusted from the Bureau of Labor Statistics BLS website httpwwwblsgovdataprices In Figure 12 we report the annual time series and the au... View full answer

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