Class Exercise: Collect data on inflation and unemployment rates in the U.S. for the quarterly periods in
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Class Exercise: Collect data on inflation and unemployment rates in the U.S. for the quarterly periods in 1980–2007 and develop and estimate a VAR model for the two variables. To compute the inflation rate, use CPI (consumer price index) and use the civilian unemployment rate for the unemployment rate. Pay careful attention to the stationarity of these variables. Also, find out if one variable Granger-causes the other variable. Present all your calculations.
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