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Time series analysis: Linear trend

Fit a linear trend equation to the following data describing average hourly earnings of US production workers. What is the trend estimate for 2010?

Year: 2001 2002 2003 2004
Average
Hourly
Earnings: $14.53 $14.95 $15.35 $15.67

2.

The following date show residential and commercial natural gas consumption (quadrillion Btu) from 1985 throught 2000.

Year Consumption Year Consumption
1985 27.6 1993 30.6
1986 26.9 1994 30.8
1987 27.6 1995 31.6
1988 28.9 1996 33.0
1989 29.4 1997 33.
1990 29.2 1998 32.8
1991 30.1 1999 35.8
1992 29.6 2000 37.4

A. Construct a graph of the time series, then superimpose a three-year centered moving average over the original series.
B. Superimpose a five-year centered moving average over the original series. Why is the moving average "smoother" when N = 5?

Solution Summary

The solution provides step by step method for the calculation of linear trend . Formula for the calculation and Interpretations of the results are also included.

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