3. The response of hours worked to different shocks has been studied extensively since Gali (1999), who argued that hours worked show a decline in response to a positive technology shock. In this problem, you will replicate some of his results. Obtain the following two quarterly time series for the period 1947Q1-2017Q4 from FRED: labor productivity, measured as Nonfarm Business Sector: Real Output Per Hour of All Persons OPHNFB and for total hours worked, measured as Nonfarm Business Sector: Hours of All Persons HOANBS. (a) Test the log of real output per hour y1,t = log OP HNF Bt and the log of hours y2,t = log HOANBSt for the presence of unit root using ADF test. Afterwards apply the ADF unit root test also to the first differences, y1,t and y2,t. Comment on results. (b) Estimate a bivariate reduced form VAR for yt = (y1,t, y2,t) 0 , using AIC information criteria to select number of lags.