Question: (A) Interpret every structural parameter in the following regression: PERSAV = 41.8081 + 0.0321 INC 19.7655 DUM 0.0021 DUM INC + e t t t

(A) Interpret every structural parameter in the following regression:

PERSAV = 41.8081 + 0.0321 INC 19.7655 DUM 0.0021 DUM INC + e t t t t t where PERSAV is personal savings in the USA;

INC is disposable personal income in the USA;

DUM = 1 if 1982 or later; 0 otherwise.

(B) Draw a diagram reflecting the regression results with PERSAV on the vertical axis and INC on the horizontal axis.

(C) What would be the new values of the structural parameters if the dummy was flip-flopped?

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