Plot past annual exchange rate changes against the differential inflation rates between Kuwait and the U.S. for the last 20 years. 2. Regress the annual rate of exchange rate changes on the annual inflation rate differential to estimate the intercept and the slope coefficient, and interpret the regression results. 3. Does the purchasing power parity hold for the Kuwaiti Dinar-U.S. dollar exchange rate? Explain your answer. Year Official exchange rate (LCU per US$, period average) Inflation Kuwait, consumer prices (annual %) Inflation USA, consumer prices (annual %) 1973 [YR1973] 0.296572316 8.266666666 6.220063864 1974 [YR1974] 0.293151416 12.99261084 11.03526022 1975 [YR1975] 0.290032332 8.392370572 9.131930735 1976 [YR1976] 0.292387416 5.235042735 5.737027083 1977 [YR1977] 0.286565999 9.889519259 6.486460064 1978 [YR1978] 0.275052749 8.689745123 7.647463851 1979 [YR1979] 0.276366082 7.049999999 11.26604409 1980 [YR1980] 0.270297416 6.928226686 13.50937033 1981 [YR1981] 0.278785332 7.374781596 10.31553398 1982 [YR1982] 0.287910999 7.776798427 6.160616062 1983 [YR1983] 0.291476666 4.718168093 3.212435233 1984 [YR1984] 0.296061916 1.17746005 4.317269076 1985 [YR1985] 0.30075325 1.490321814 3.561116458 1986 [YR1986] 0.290594667 0.95360674 1.858736059 1987 [YR1987] 0.27866325 0.654844692 3.740875912 1988 [YR1988] 0.27902925 1.46813288 4.009088244 1989 [YR1989] 0.293779417 3.342033591 4.82700303 1990 [YR1990] 0.288455 9.833635315 5.39795644 1991 [YR1991] 0.284268577 9.058188362 4.234963965 1992 [YR1992] 0.293222667 -0.545471214 3.028819678 1993 [YR1993] 0.3018386 0.382541365 2.951656966 1994 [YR1994] 0.296870315 2.534435262 2.607441592 1995 [YR1995] 0.298447721 2.686727566 2.805419689 1996 [YR1996] 0.299408563 3.553985697 2.9312042 1997 [YR1997] 0.303348835 0.682191435 2.337689937 1998 [YR1998] 0.30475564 0.129658288 1.552279099 1999 [YR1999] 0.304414667 2.990810359 2.188027197 2000 [YR2000] 0.306751583 1.812946139 3.376857271 2001 [YR2001] 0.306681667 1.3 2.826171119 2002 [YR2002] 0.303914252 0.888450148 1.586031627 2003 [YR2003] 0.298011521 0.961350294 2.270094973 2004 [YR2004] 0.2947 1.248564437 2.677236693 2005 [YR2005] 0.292 4.142975836 3.392746845 2006 [YR2006] 0.290176225 3.057013392 3.225944101 2007 [YR2007] 0.284213958 5.484949833 2.852672482 2008 [YR2008] 0.268828367 10.58270979 3.839100297 2009 [YR2009] 0.287785417 4.609595484 -0.355546266 2010 [YR2010] 0.286606592 4.496402878 1.640043442 2011 [YR2011] 0.275978944 4.905335628 3.156841569 2012 [YR2012] 0.279935558 3.199343724 2.069337265 2013 [YR2013] 0.283589442 2.702702703 1.464832656 2014 [YR2014] 0.284557198 2.908900929 1.622222977