That file contains quarterly time series data from the first quarter of 1970 to the second quarter of 2018. The variables available are:

MZM = Money Supply (Dependent Variable)

FFUNDS = Federal Funds Rate

CPI = Consumer Price Index

YD = Disposable Income

TREND = Trend or Observation Number

Each question is worth 15 points.

1.With MZM as the dependent variable, conduct the multiple regression and comment on your results (include all other variables listed above as explanatory variables). Using this, identify all variables that appear not to be significant at the 0.05 level and conduct a test on the joint significance of all the slopes (F test on multiple slopes). Comment on your results.

2.Using the full model (includes all explanatory variables), check to see if there are nonlinearities that exist between MZM and FFUNDS, CPI, and YD. For simplicity, you only need to consider the square, the reciprocal, and the natural logs of FFUNDS, CPI, and YD in your analysis. Provide your final model.

3.Suppose we believe the full model (include all variables) changes when we have a Democratic President. These years are:

Carter:January 1977 - December 1980

Clinton:January 1993 - December 2000

Obama:January 2009 - December 2016

Use a dummy variable to test to see whether this belief is correct. Test at the 0.05 level.

4.There is a belief that the relation between money supply and all other variables changed after the first quarter of 2008. Using the full model (include all variables), use a Chow test to confirm or refute this belief. Test at the 0.05 level.