1. OPEC production, part 2. Using the data from Exercise 54, develop and compare the following models.
a) Fit an appropriate autoregressive model by testing for the significance of each autoregressive term.
b) Obtain a forecast for March 2007.
c) Compare your forecast for March to the actual value (by computing APE) and to the forecasts obtained in Exercise 54.
d) Recommend an appropriate model for forecasting this time series.
2. Interest rates, part 2. Consider the average annual in- terest rates we saw in Exercise 34. That exercise showed a linear model fit to these data.
a) Fit a linear trend model to this series but do not use the values for 2005 and 2006.
b) Fit an exponential trend model to this series but do not use the values for 2005 and 2006.
c) Use both models to forecast the average interest rate for 2005 and 2006. Which model produces better forecasts?
d) What other time series components (besides trend) are likely present in this series?