Prediction of unemployment using time trend and seasonality.
Consider the following model:
This model relates the price of houses to their distance from an incinerator both before and after knowledge the incinerator's construction was known. Y81 is a dummy variable for after the construction project was announced. In order to consider the problem more thoroughly, a more complete model was also estimated:
Moreover, some other configurations were also estimated. The results are shown on the following pages. Based on this data, answer the following problems (Note: It may be possible to compute needed values from more than one output set. In such cases, choose the one that makes the most sense to you and describe your reason.)
Is this a good model for unemployment? Illustrate what would you add to study the problem more completely? What assumption does this model make regarding unemployment?