Economics 421/521

Winter 2006

Homework #7

[pdf file]

1. Continuing with problem 12.34 from the last homework, correct the model for autocorrelation using the Cochrane-Orcutt procedure. [Table 12.9 data set]

2. Show that adding lagged values of ~~sales~~ inventories can overcome the
autocorrelation problem.

3. I’m making this shorter than usual so you can work on your projects.

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