Question 13.59

13.59 Exponential smoothing for information services hires rate.

Consider the monthly information services sector hires rate time series from Exercise 13.46 (pages 693–694).

hires

Calculate and plot (on a single time plot) exponential smoothing models using smoothing constants of $w = 0.1$ , $0.5$ , and $0.9$ .
Comment on the smoothness of each exponential smoothing model in part (a).
The series ended with the hires rate of June 2014. For each model in part (a), calculate the forecasts for the hires rate of July 2014.

13.59

(b) The smaller the smoothing constant $w$ is, the smoother the model is. Or alternatively, a higher damping factor, $1 - w$ , provides a smoother model. (c) 2.587, 2.874, 3.061.