For Exercises 13.38 and 13.39, see page 690.
13.39 Unemployment rate.
Let denote the unemployment rate for time period .
13.39
(a) . (b) The plot of the residuals against time shows a slight pattern, but overall, it is fairly random. The ACF confirms that the residuals are indeed random. The AR(1) does account for some of the systematic movements in unemployment rates. (c) . They revert to the overall mean.
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