This data set includes recent monthly spot exchange rates for Poland Zloty against the U.S. dollar.

Step 1: Using one lag only and the range of data on SPOT rate for the data, estimate the following specification. Use regression in Excel or in any other software that you desire. Note again: You have to accurately follow this instruction, otherwise your answers will be incorrect.

SR _t = a₀ + a₁ SR _{t - 1}

Where SR _t is spot exchange rate at time t; a₀ is the intercept and a₁ is the slope.

The estimated value of a₁ is 0.9717

Step 2:Using the above estimated relation, forecast the outright values of Polish currency for 1 and 2 months ahead, i.e., beyond the end of the data (= for July 5 August 5).

Questions:

1. The estimated value of a₀ is:
2. The outright forecast for 1 month ahead beyond the end of the data is:
3. The outright forecast for 2 months ahead beyond the end of the data is:

CURRENCY	U$
6/5/10	3.47575
7/5/10	3.2817
8/5/10	3.0333
9/5/10	3.06475
10/5/10	2.8588
11/5/10	2.79045
12/5/10	2.97985
1/5/11	2.9485
2/5/11	2.86995
3/5/11	2.84605
4/5/11	2.81915
5/5/11	2.70915
6/5/11	2.71735
7/5/11	2.72715
8/5/11	2.84825
9/5/11	2.9867
10/5/11	3.29155
11/5/11	3.1699
12/5/11	3.30055
1/5/12	3.524
2/5/12	3.1803
3/5/12	3.12355
4/5/12	3.1833
5/5/12	3.19305
6/5/12	3.5188
7/5/12	3.40245
8/5/12	3.29785
9/5/12	3.3194
10/5/12	3.1179
11/5/12	3.2232
12/5/12	3.15745
1/5/13	3.1586
2/5/13	3.08535
3/5/13	3.16665
4/5/13	3.19265
5/5/13	3.16415
6/5/13	3.26585
7/5/13	3.35995
8/5/13	3.1853
9/5/13	3.27135
10/5/13	3.09255
11/5/13	3.10495
12/5/13	3.06935
1/5/14	3.06315
2/5/14	3.09605
3/5/14	3.04705
4/5/14	3.0385
5/5/14	3.02955
6/5/14	3.0387
7/5/14	3.04965
8/5/14	3.12825
9/5/14	3.2263
10/5/14	3.34735
11/5/14	3.38525
12/5/14	3.38105
1/5/15	3.6016
2/5/15	3.64275
3/5/15	3.75425
4/5/15	3.73815
5/5/15	3.6063
6/5/15	3.74365
7/5/15	3.7751
8/5/15	3.8379
9/5/15	3.8028
10/5/15	3.78465
11/5/15	3.90705
12/5/15	3.9623
1/5/16	4.0171
2/5/16	3.96185
3/5/16	3.93145
4/5/16	3.74545
5/5/16	3.8814
6/5/16	3.86405
7/5/16	4.00445
8/5/16	3.86725
9/5/16	3.9037
10/5/16	3.837
11/5/16	3.88875
12/5/16	4.1942
1/5/17	4.1228
2/5/17	3.98395
3/5/17	4.07115
4/5/17	3.96465
5/5/17	3.8318
6/5/17	3.72445
7/5/17	3.746
8/5/17	3.60635
9/5/17	3.55555
10/5/17	3.67385
11/5/17	3.6539
12/5/17	3.55605
1/5/18	3.451
2/5/18	3.3406
3/5/18	3.4025
4/5/18	3.43365
5/5/18	3.56035
6/5/18	3.66535
7/5/18	3.7264
8/5/18	3.6709
9/5/18	3.7233
10/5/18	3.7417
11/5/18	3.77925
12/5/18	3.77965
1/5/19	3.75985
2/5/19	3.7577
3/5/19	3.80075
4/5/19	3.82235
5/5/19	3.82595
6/5/19	3.79535
7/5/19	3.7893
8/5/19	3.8604
9/5/19	3.92835
10/5/19	3.9341
11/5/19	3.8494
12/5/19	3.8574
1/5/20	3.79925
2/5/20	3.8587
3/5/20	3.84045
4/5/20	4.22915
5/5/20	4.1806
6/5/20	3.9203