1. Modeling Unemployment Rates June 3, 2008 Ryan DeGrazier Chun-Hung Lin Johan Rothe Chun-Kai Wang Anastasia Zavodny

2. Motivation Policy: Policy: –Monetary –Fiscal Speculative Investing Speculative Investing –Hedging/Risk management Business Planning Business Planning –Costs and labor requirements

3. Civilian Unemployment Rate - Raw Data

4. Civilian Unemployment Rate - Histogram

5. Correlogram & Unit-Root Test

6. Civilian Unemployment Rate – First Difference

7. Histogram of First Difference

8. First Difference - Correlogram & Unit-Root Test

9. First ARMA Model

10. Diagnose First ARMA Model - Correlogram

11. Diagnose First ARMA Model – ARCH/GARCH

12. Second Model – ARMA & GARCH(1, 1)

13. Diagnose Second Model – Histogram of Residuals

14. Diagnose Second Model – ARCH/GARCH

15. Final Model Estimation 1948:07 – 2008:04

16. Residual Graph

17. Diagnostics – Correlogram of Residuals

18. Diagnostics – Correlogram of Squared Residuals

19. Diagnostics – Historgram of Residuals

20. Diagnostics – ARCH LM Test

21. Final Model Estimation 1948:07 – 2007:04

22. Internal Forecast – 2007:05 to 2008:04

23. Internal Forecast & Realized Data

24. Internal Forecast & Realized Data - Recolored

25. Forecast – 2008:05 to 2009:04

27. Recolored Forecast – 2008:05 to 2009:04

29. Thank you!!