Hi In part ii) C) part, please explain how the value of kt=-0.02*(t-2010) has been calculated.I didn't quite get this part of the question.
Hello From the formula given in the question and predicting future errors with their mean value of 0, we have, for example: \( \hat{k}_{2021} = \hat{k}_{2020} - 0.02 \) \( \hat{k}_{2022} = \hat{k}_{2021} - 0.02 \) and so on. We can write these all in terms of \( \hat{k}_{2020} \). For example: \( \hat{k}_{2022} = \hat{k}_{2021} - 0.02 = \hat{k}_{2020} - 0.02 - 0.02 = \hat{k}_{2020} - 2 * 0.02 \) In general: \( \hat{k}_{t} = \hat{k}_{2020} - (t-2020) * 0.02 \) for \( t \ge 2021 \). Hope this helps Andy
