Use the data in WAGEPRC RAW for this exercise Problem 11 5 gave estimates of a finite distributed lag model of gprice on gwage, where 12 lags of gwage are used (i) Estimate a simple geometric DL model of gprice on gwage In particular, estimate equation (18 11) by OLS What are the estimated impact propensity and LRP Sketch the estimated lag distribution (ii) Compare the estimated IP and LRP to those obtained in Problem 11 5 How do the estimated lag distributions compare (iii) Now, estimate the rational distributed lag model from (18 16) Sketch the lag distribution and compare the estimated IP and LRP to those obtained in part (ii)

Question: Use the data in WAGEPRC.RAW for this exercise. Problem 11.5 gave estimates of a finite distributed lag model of gprice on gwage, where 12 lags

Use the data in WAGEPRC.RAW for this exercise. Problem 11.5 gave estimates of a finite distributed lag model of gprice on gwage, where 12 lags of gwage are used.
(i) Estimate a simple geometric DL model of gprice on gwage. In particular, estimate equation (18.11) by OLS. What are the estimated impact propensity and LRP? Sketch the estimated lag Compare the estimated IP and LRP to those obtained in Problem 11.5. How do the estimated lag distributions compare?
(iii) Now, estimate the rational distributed lag model from (18.16). Sketch the lag and compare the estimated IP and LRP to those obtained in part (ii).

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