To explain the behavior of business loan activity at large commercial banks, Bruce J. Summers used the following model:
Yt = 1 / A + Bt (A)
where Y is commercial and industrial (C&I) loans in millions of dollars, and t is time, measured in months. The data used in the analysis was collected monthly for the years 1966 to 1967, a total of 24 observations.
For estimation purposes, however, the author used the following model:
1 / Yt = A + Bt
The regression results based on this model for banks including New York City banks and excluding New York City banks are given in Equations (1) and (2), respectively:

*Durbin-Watson (DW) statistic
a. Why did the author use Model (B) rather than Model (A)?
b. What are the properties of the two models?
c. Interpret the slope coefficients in Models (1) and (2). Are the two slope coefficients statistically significant?
d. How would you find out the standard errors of the intercept and slope coefficients in the two regressions?
e. Is there a difference in the behavior of New York City and the non-New York City banks in their C&I activity? How would you go about testing the difference, if any, formally?

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= 52.00-02i Yi t96.13) (-24.52) R 0.84 DW 0.04 R2=0.97 DW 003* 26.79-0.141 t= (196.70) (-66.52)