Shown here are the nominal eff ective exchange rates (NEERs) for the Euro area for the years 1990 through 2007 from the Eurostat Data website. Use the data to answer the following questions.

a. Compute the four-year moving average to forecast the NEERs from 1994 through 2007.

b. Compute the four-year weighted moving average to forecast the NEERs from 1994 through 2007. Weight the most recent year by 4, the next most recent year by 3, the next year by 2, and the last year of the four by 1.

c. Determine the errors for parts

(a) and (b). Compute MSE for parts

(a) and (b). Compare the MSE values and comment on the eff ectiveness of the moving average versus the weighted moving average for these data.

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Year NEER Year NEER 1990 111.77 1999 95.64 1991 107.83 2000 85.58 1992 110.84 2001 86.89 1993 105.2 2002 89.54 1994 103.82 2003 99.95 1995 108.94 2004 103.49 1996 108.77 2005 103.27 1997 99.56 2006 104.01 1998 101.32 2007 109.27