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You decide to estimate an AR(1) model for the change in the unemployment rate: Y t =b0+b1Y t-1 +u t using quarterly data from 1960:Q1

You decide to estimate an AR(1) model for the change in the unemployment rate:

Y_t=b0+b1Y_t-1+u_tusing quarterly data from 1960:Q1 to 1999:Q4. The result is as follows:

Yt=0.003+0.621Yt1,R2=0.393,SER=0.255

(0.022)(0.106)

Let Y_1999:Q4be 4.1.What is your forecast for the change in unemployment rate level in 2000:Q1(Y_T+1|T=Y_{2000:Q1|1999:Q4})?

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