FORECASTING THE LONG TERM AND CHAPTER 12 FORECASTING THE LONG TERM AND THE SHORT TERM JOINTLY Figure 12.1 The Economist’s Reality González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Figure 12.2 The Forecaster’s Reality González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Figure 12.3 Production Versus Consumption González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Figure 12.4 Deviations from Equilibrium: González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

12.1 Finding a Long-Term Equilibrium Relationship Table 12.1 Testing for Unit Root in Production and Consumption González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Table 12.1 Testing for Unit Root in Production and Consumption (continued) González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Table 12.2 Critical Values to Test for Cointegration González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Table 12.3 Estimation of the Cointegrating Relation González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Figure 12.5 Residuals of the Cointegrating Relation González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Table 12.4 Testing the Stationarity of the Residuals González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

12.2 Quantifying Short-Term Dynamics: Vector Error Correction Model Figure 12.6 Short-Term Dynamics González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Table 12.5 Choice of Number of Lags in VEC González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Table 12.6 Estimation of VEC González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

12.3 Constructing the Forecast Table 12.7 Multistep Forecast for Consumption and Production Growth Rates González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.

Figure 12.7 Multistep Forecast for Consumption and Production González-Rivera: Forecasting for Economics and Business, Copyright © 2013 Pearson Education, Inc.