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cing factor. As a first step, we need to first understand whether the consumption itself (the nondurable consumption series Ct given in the file PS4Con.txt)
cing factor. As a first step, we need to first understand whether the consumption itself (the nondurable consumption series Ct given in the file "PS4Con.txt") is stationary and what model shall we use to describe the data by answering the following questions. In order to compare the forecast in the end, we will hold out the last four observations. (a) Plot the consumption data (Ct) first, and what do you observe? As a common practice, we can log of consumption, i.e. ct = ln(Ct), in order to account for the exponential growth in consumption. Now plot ct , and what do you observe
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