Q.2: An economist who estimated the Keynesian money demand function in logarithmic form using data from Sri Lankan economy, obtained the graph on the left by using predicted and actual money demand. While the model was very successful in predicting money demand until 2010 (small forecast errors), it predicts a consistently higher money demand than actually occurred since then (growing forecast errors each period). 4 Ln(M) 4.75 4.7 4.65 4.6 4.55 Actual 4.5 Predicted 4.45 Help this economist who has trouble explaining this situation, even if you do not know anything about the economy in question. stor stor otor Soo

Q.2: An economist who estimated the Keynesian money demand function in logarithmic form using data from Sri Lankan economy, obtained the graph on the left by using predicted and actual money demand. While the model was very successful in predicting money demand until 2010 (small forecast errors), it predicts a consistently higher money demand than actually occurred since then (growing forecast errors each period). 4 Ln(M) 4.75 4.7 4.65 4.6 4.55 Actual 4.5 Predicted 4.45 Help this economist who has trouble explaining this situation, even if you do not know anything about the economy in question. stor stor otor Soo

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter13: Regression And Forecasting Models

Section13.3: Simple Regression Models

Problem 9P

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