Explain the inflation rate, Econometrics

The following regression was estimated to explain the inflation rate in the USA.  The data set contains annual observations from 1970 to 2010.

      Inft  =  2500 +   50*Xt  +   0.4Inflt-1

    se(B)                (5.0)        (0.002)             R2 = 0.92

where Inft is the inflation rate in a given year Xt is the growth in money supply in the same year

a.  Suppose this model represents a Koyck lag structure.  Find the 1st, 5th, and 10th lag coefficients on Xt.

b. If this was a forecasting model, exlpain what  AR(3) and MA(4) models would look like (separate not ARMA)

c.  Now assume you have the same time series data for 4 countries (USA, Canada, England, Japan).  Explain what would a fixed effects model look like, and how would it improve on the basic model?.

Posted Date: 2/18/2013 12:07:04 AM | Location : United States







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