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1. t = 0.7 t-1 0.1 t-2 + t Want to make forecasts of for the future periods = 301 through = 304. Using the

1. t= 0.7t-1 0.1t-2+ t

Want to make forecasts of for the future periods = 301 through = 304. Using the AR(1) regression in Table 1 as well as the recent data seen in Table 2, make iterated multi-step forecasts up until = 304. Explain the behavior of your forecasts as the forecast horizon increases.

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Table 1: AR(1) Regression Output Source | SS df MS Number of obs = 299 F (1, 297) 26.34 11 1I Model | 26 . 0252874 1 26 . 0252874 Prob > F 0 . 0000 Residual | 293 . 472422 297 . 988122633 R-squared = 0 . 0815 Adj R-squared = 0 . 0784 Total | 319. 497709 298 1. 07213996 Root MSE = . 99404 X Coef. Std. Err. t P>ItI [95% Conf. Interval] -+- X L1 . 0 . 286 0 . 056 5. 13 0. 000 0. 177 0. 396 cons 0 . 940 0 . 094 10 .05 0 . 000 0 . 756 1 . 124 Table 2: Data Excerpt X 296 1.192 297 1.342 298 0.380 299 1.945 300 -0.164

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