This exercise concerns motel : the total monthly takings from accommodation and the total room nights occupied at hotels, motels, and guest houses in Victoria, Australia, between January 1980 and June...

This exercise concerns motel : the total monthly takings from accommodation and the total room nights occupied at hotels, motels, and guest houses in Victoria, Australia, between January 1980 and June 1995. Total monthly takings are in thousands of Australian dollars; total room nights occupied are in thousands.

a. Use the data to calculate the average cost of a night’s accommodation in Victoria each month.

b. Use cpimel to estimate the monthly CPI.

c. Produce time series plots of both variables and explain why logarithms of both variables need to be taken before tting any models.

d. Fit an appropriate regression model with ARIMA errors. Explain your reasoning in arriving at the nal model.

e. Forecast the average price per room for the next twelve months using your tted model. (Hint: You will need to produce forecasts of the CPI gures rst.)