Lag Length

Question 1

• Select an MNC organization except for fast food company (provide brief background of the chosen organization).
•  Propose a geographic location (i.e. country) where you wish to expand the business.
•  Analyze the geographic location and how your business expansion will be affected either positively or negatively by the following factors:-

1. Political
2. Economic
3. Socio-cultural
4. Technology
5. Legal

•  Propose the best mode of entry for your business expansion with relevant justification, highlighting its advantages and disadvantages.
•  Based on the analysis and findings, conclude with relevant justification why the business expansion that you propose is viable.

Question 2

(a) Plot c t and y t over time on the same graph and describe both variables’ main feature(s).
(b) Based on a maximum lag of eight, use VARselect (as in tutorial 10) to choose an appropriate lag length for a VAR model for c t and y t . Report the chosen lag length.
(c) (*) Write out in equation form your chosen estimated equation for c t from (b) above.
(d) Does the residual correlogram (autocorrelation function) suggest that your chosen equation for c t constitutes a valid forecasting model, and why (or why not)?
(e) Use your estimated equation for c t to forecast log consumption two periods ahead. Report these forecasts.