Data given:
b1: (GROWTH)
b2: (RETURNS)
b3: (SIR)
b4: (LIR).

(a)i) Estimate the linear model
GROWTHt=B1+ B2RETURNSt+B3SIR +
B4LIRt + Ut

ii) Calculate the correlation coefficient and the coefficient of determination and interpret them.

(b) Are each of the estimated coefficients individually statistically significant, Which test do you use?

(c) Is the regression overall significant? Which control do you use and why?

(d) Consider the hypothesis that interest rates (long-term and short-term) do not affect the rate of economic growth
versus the hypothesis that at least one of them does affect the rate of economic growth. (SIR,LIR).

 

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Regression Statistics 0.45004570 Multiple R 6 0.20254113 R Square 7 Adjusted R 0.18059272 Square Standard 0.00472026 Error 7 Observations 113 ANOVA Significanc df SS MS F e F 1.71651E- Regression 3 0.00062 0.00021 9.22806 05 2.2281E- Residual 109 0.00243 05 Total 112 0.00305 Standard Upper Coefficients Error t Stat P-value Lower 95% 95% Intercept 0.00187 0.00142 1.31900 0.18994 -0.00094 0.00469 RETURNS 0.03342 0.01307 2.55666 0.01194 0.00751 0.05932 SIR -0.11670 0.02919 -3.99734 0.00012 -0.17456 -0.05884 LIR 0.10822 0.03845 2.81474 0.00579 0.03202 0.18443 Regression Statistics 0.45004570 Multiple R 6 0.20254113 R Square 7 Adjusted R 0.18059272 Square Standard 0.00472026 Error 7 Observations 113 ANOVA Significanc df SS MS F e F 1.71651E- Regression 3 0.00062 0.00021 9.22806 05 2.2281E- Residual 109 0.00243 05 Total 112 0.00305 Standard Upper Coefficients Error t Stat P-value Lower 95% 95% Intercept 0.00187 0.00142 1.31900 0.18994 -0.00094 0.00469 RETURNS 0.03342 0.01307 2.55666 0.01194 0.00751 0.05932 SIR -0.11670 0.02919 -3.99734 0.00012 -0.17456 -0.05884 LIR 0.10822 0.03845 2.81474 0.00579 0.03202 0.18443