You Have Decided to Analyze the Year-To-Year Variation in Temperature

Essay

You have decided to analyze the year-to-year variation in temperature data.Specifically
you want to use this year's temperature to predict next year's temperature for certain
cities.As a result, you collect the daily high temperature (Temp)for 100 randomly
selected days in a given year for three United States cities: Boston, Chicago, and Los
Angeles.You then repeat the exercise for the following year.The regression results are as
follows (heteroskedasticity-robust standard errors in parentheses): $\widehat { \operatorname { Temp } _ { t } ^ { B O S } } = 18.19 + 0.75 \times \operatorname { Temp } _ { t - 1 } ^ { B O S } ; R ^ { 2 } = 0.62 , S E R = 12.33$
$(6.46)(0.10)$

$\begin{aligned}\widehat{\operatorname{Temp}_{t}^{C H I}}= & 2.47+0.95 \times \operatorname{Temp}_{t-1}^{C H I} ; R^{2}=0.93, S E R=5.85 \\& (3.98)(0.05)\end{aligned}$

$\widehat { \text { Temp } _ { t } ^ { L A } } = 37.54 + 0.44 \times \text { Temp } _ { t - 1 } ^ { L A } ; R ^ { 2 } = 0.18 , \text { SER } = 7.17$
$(15.33)(0.22)$ (a)What is the prediction of the above regression for Los Angeles if the temperature in the
previous year was 75 degrees? What would be the prediction for Boston?