Problem 3.22

The following table gives data on GDP for the US for the years 1972-1991.

Download:  0322.dat ,  0322.xls
 

Year 
GDP(current price)
GDPF(fixed price)
X
1972
1207.00
3107.10
1
1973
1349.60
3268.60
2
1974
1458.60
3248.10
3
1975
1585.90
3221.70
4
1976
1768.40
3380.80
5
1977
1974.10
3533.30
6
1978
2232.70
3703.50
7
1979
2488.60
3796.80
8
1980
2708.00
3776.30
9
1981
3030.60
3843.10
10
1982
3149.60
3760.30
11
1983
3405.00
3906.60
12
1984
3777.20
4148.50
13
1985
4038.70
4279.80
14
1986
4268.60
4404.50
15
1987
4539.90
4539.90
16
1988
4900.40
4718.60
17
1989
5250.80
4838.00
18
1990
5522.20
4877.50
19
1991
5677.50
4821.00
20

(a) Plot the GDP in current and constant dollars against time. (Eviews)

(b) Letting Y denote GDP and X time, see if the following model fits the GDP data:

Yt=£]1+ £]2Xt+ut
     Estimate this model for both current and constant-dollar GDP. (Eviews)  (Rats)

(c) How would you interpret £]2 ? (Suggested Anwser)

(d) If there is a difference between £]2 estimated for current-dollar GDP and that estimated for
      constant-dollar GDP, what explain the difference? (Suggested Anwser)

(e) From your results what canyou say about the nature of inflation in the U.S. over the sample
     period? (Suggested Anwser)
 
 

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