Week 4: The forecaster’s toolbox

What you will learn this week

Four benchmark forecasting methods that we will use for comparison
Fitted values, residuals
Forecasting with transformations

Pre-class activities

Read Chapter 5 of the textbook and watch all embedded videos

Exercises (on your own or in tutorial)

Complete Exercises 1-5, 9-10 from Section 3.7 of the book.

Solutions to Exercises

Slides for seminar

Download pdf

R code used in seminar

Seminar activities

Create a training set for household wealth (hh_budget) by withholding the last four years as a test set.
Fit all the appropriate benchmark methods to the training set and forecast the periods covered by the test set.
Compute the accuracy of your forecasts. Which method does best?
Do the residuals from the best method resemble white noise?



## Assignments

* [Assignment 2](../assignments/A2.qmd) is due on Sunday 24 March.
* [Assignment 3](../assignments/A3.qmd) is due on Sunday 14 April.