Your assignment is to write a one page paper answering the question posed below. One page is the absolute limit. (You must attach a technical appendix showing computer output for your estimation results, but you must assume that the reader will rely only on the one page summary and not read the appendix.)

Question: Based on data available through the end of 2010, forecast the retail price of industrial electricity for January through May 2011. Comment on how close your forecasts were compared to what actually happened to electricity prices. Be sure to explain "how close" in a way a non-statistician can understand.

The file Electricity Prices.wf1 has monthly data on industrial electricity prices, as well as the index of industrial production. You may use all or part of this data and/or add other data (or not) as you wish. (Although forecast targets are the January through May 2011 prices given in this file.)

EViews warnings: Be sure to adjust samples so that no data after 2010 is included. If you use the EViews Forecast tab be even more careful that the "Insert actuals for out-of-sample observations" box is unchecked.