Question: The file VAR_US_DATA.xlsx contains data for various macroeconomic variables for the US for a time span of 19602019. Create a new file on EViews, with

The file VAR_US_DATA.xlsx contains data for various macroeconomic variables for the US for a time span of 1960–2019. Create a new file on EViews, with yearly data frequency for 1960–2019. Copy and paste the data in EViews.

The variables are:

debt: government debt as percent of GDP gov: government expenditures as percent of GDP growth: real GDP growth tax: tax revenues as percent of GDP inflation: the inflation rate m3: broad money as percent of GDP it: interest rate

(a) Estimate a VAR(1) model and discuss your results.

(b) Estimate a VAR(2) model and discuss your results.

(c) Obtain the impulse response functions. Discuss the resulting graphs.

(d) Check for pairwise Granger causality (using 1 and 2 lags) and discuss your results.

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