Use the data in ANMACRO.XLS and statistical software to run the following regression:

where m2 is the money supply cpi is the consumer price index ngdp is nominal gdp (A) Plot the error terms over time. Do you suspect serial correlation? Explain.
(B) Plot the error terms against their lagged values. Do you suspect serial correlation? Explain.
(C) Perform a Durbin-Watson test. Show the five-step procedure.

Transcribed Image Text:

m/cpi, Bo+ngdp + cpi, + e