Question: C7 Use the data set CONSUMP.RAW for this exercis (i) Estimate a simple regression model relating the growth in real per capita consumption (of nondurables

C7 Use the data set CONSUMP.RAW for this exercis (i) Estimate a simple regression model relating the growth in real per capita consumption (of nondurables and services) to the growth in real per capita disposable income. Use the change in the logarithms in both cases. Report the results in the usual form. Interpret the equation and discuss statistical significance.

(ii) Add a lag of the growth in real per capita disposable income to the equation from part (i). What do you conclude about adjustment lags in consumption growth? (iii) Add the real interest rate to the equation in part (i). Does it affect consumption growth? C8 Use the data in FERTIL3.RAW for this exercis (i) Add pet23 and pet24 to equation (10.19). Test for joint significance of these lags. (ii) Find the estimated long-run propensity and its standard error in the model from part (i). Compare these with those obtained from equation (10.19). (iii) Estimate the polynomial distributed lag model from Problem 6. Find the estimated LRP and compare this with what is obtained from the unrestricted model.

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