ECON 423 - Problem Set #6

Forecasting Evaluation

Due:Wednesday, November 26, by midnight

Data: ps6_f03_data.xls (Excel Spreadsheet)

Introduction: This problem set is based on material in Chapters 10 and 16. This problem set is designed to familiarize you with the evaluation of forecasts.

Instructions: Open the spreadsheet ps6_f03_data.xls in Excel. This spreadsheet contains the following variables:

year: Calendar year
avg_attend: Average annual attendance
wins: Number of games won in season

for the Philadelphia Phillies baseball team.

Your answer to the questions below will be in a spreadsheet (Excel) file. When you are finished, name your spreadsheet file ps6xxxxxx.xls where xxxxx is your last name. Attach the spreadsheet file to an e-mail and send it to me before midnight on Thursday, November 26th.

Problem Set Question: In this problem set, you will forecast and evaluate demand for attendance at Philadelphia Phillies baseball games.

Create a time series plot of the average annual attendance for the Philadelphia Phillies over the period 1969-2001. Describe the relevant features on this graph.
Use the OLS method to estimate all parameters of the following AR(3) regression model

Y_i = b_o + b₁Y_i-1 + b₂Y_i-2 + b₃Y_i-3 + e_i
where Y_i is average annual attendance in season i.
Explain what the coefficient estimates from the regression model mean and describe the regression results in the context of their use in forecasting attendance demand.
Use the results to generate a point forecast of average annual attendance over the period 1980-1991.
Calculate the following statistics for the within sample forecasts from the AR(3) regression model over the period 1980-2001: Mean Absolute Error, Mean Square Error, Root Mean Square Error
Describe what each of these statistics mean.