Estimate all ARMA models from order (0,0) to (4,4) for △cpit over the sample period 1960Q1 to 2009Q4. From your estimations which is the preferred model order? Explain why? (You would also need to report all relevant information for the models you estimate, including the value of the AIC and SBIC and other relevant required criteria in a Table).
Re-estimate the preferred model(s) from Question 2(d). Again, use only the sample 1960Q1 to 2009Q4. Report and comment on the results. Perform diagnostic checks on the residuals from these estimated model(s). Do the model(s) fit the data well?
Use the model(s) estimated in Question 2(e) to generate one step ahead (static) forecasts in Eviews for the period 2010Q1-2012Q4. Create a graph of the actual △cpit series and the forecasts that you have generated over the specified out-of-sample period. Comment on the results.