Consider the following 20 observations, representing quarterly information for 5 years. The data are also on the text website, labeled Exercise 18.22.
a. Plot the above series and discuss its trend and seasonal components.
b. Use decomposition analysis to make forecasts with the exponential trend and seasonal indices. Compute the mean square errors of in-sample forecast errors.
c. Estimate an exponential trend with seasonal dummies model. Compute the mean square errors of in-sample forecast errors.
d. Use the appropriate model to make forecasts for all four quarters of the next year.