The interpretation of the slope is the:

A. change in the annual growth rate of the money supply per year.

B. average annual growth rate of the money supply after the shift in policy.

C. difference in the average annual growth rate of the money supply from before to after the shift in policy.

An analyst is examining the annual growth of the money supply for a country over the past 30 years. This country experienced a central bank policy shift 15 years ago, which altered the approach to the management of the money supply.
The analyst estimated a model using the annual growth rate in the money supply regressed on the variable (SHIFT) that takes on a value of 0 before the policy shift and 1 after. She estimated the values in Exhibit 1:

Transcribed Image Text:

Exhibit 1: SHIFT Estimates Intercept SHIFT Coefficients 5.767264 -5.13912 Critical t-values, level of significance of 0.05: eOne-sided, left side: -1.701 fone-sided, right side: +1.701 gTwo-sided: 2.048 Standard Error 0.445229 0.629649 t-Stat. 12.95348 -8.16188.