Here is the STATISTIC:
year = Year of observation urate = Civilian unemployment rate (in %) gdpdef = Gross Domestic Product Implicit Price Deflator (GDPDEF) inflgdp = Annual inflation rate using GDP implicit price deflator (in %) pastinflgdp = Weighted average of past 4 years of inflgdp (in %) infpgdplyr One-year ahead inflation in GDPDEF Survey of Professional Forecasters (in %) (d) (1pt) Estimate now a model of inflation from 1970 to 2014, using unemployment and expected inflation as the only regressors. Report the SRL, (default) standard errors, t-statistics, p-values, R-squared, and number of observations in a compact format. 4 (e) (1pt) Using your results from (d), test if the relationship described in (c) still holds. (f) (1pt) Using your results from (d), provide evidence for or against Milton Friedman's argument that in the long run, inflation is driven by inflation expectations. (g) (1pt) Which CLRM assumption is likely to be violated in this data set? Does this affect your results in (b) and (d)? Briefly explain why (not). year lurate 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 gdpdef inflgdp pastinflgdp infpgdp1yr 6.6 13.518 -1.965335 4.3 14.09 4.231395 3.1 14.869 5.528744 2.7 15.091 1.493039 3.474261 4.5 15.219 0.8481877 2.905584 5 15.343 0.814771 2.316075 4.2 15.743 2.607052 1.431847 4.2 16.264 3.309407 1.606194 5.2 16.711 2.748401 2.353652 6.2 17.123 2.465442 2.69507 5.3 17.326 1.18554 2.733284 6.6 17.56 1.350571 2.09447 6 17.745 1.053531 1.663819 5.5 17.938 1.08763 1.310236 5.5 18.216 1.549783 1.13978 5 18.476 1.427317 1.291965 4 18.853 2.040485 1.358741 3.8 19.481 3.331035 1.663108 3.8 20.067 3.008059 2.385001 3.4 20.999 4.644441 2.753363 3.5 22.071 5.105005 3.63045 6.1 23.182 5.033755 4.370049 3.54 6 24.288 4.770943 4.774697 3.42 5.2 25.366 4.438406 4.903949 3.7 4.9 27.077 6.74525 4.723897 5.37 7.2 29.923 10.51077 5.487186 7.68 8.2 32.139 7.405674 7.592657 6.21 7.8 33.815 5.214848 7.90839 5.73 6.4 36.036 6.568091 7.08432 5.96 6 38.661 7.284382 6.723902 7.09 6 41.986 8.600398 6.667717 8.19 7.2 46.046 9.66989 7.460577 9.37 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 8.5 49.863 10.8 52.483 54.219 1981 1982 1983 1984 1985 1986 7.52 5.59 5.53 88.289536 5.254397 3.307738 3.430532 2.958327 88.3 7.3 56.079 88.561761 8.665299 7.382638 5.524311 4.244367 3.399477 2.649122 2.68621 7 57.738 4.41 3.97 3.11 1.861859 6.6 5.7 58.8813 60.567 1987 2.982334 3.62 1988 5.3 62.859 4.37 3.98 5.4 65.122 3.784239 3.600121 3.838948 1989 1990 3.0766 3.357973 6.3 7.3 67.622 69.643 4.26 3.19 1991 2.988672 2.237124 1992 7.4 71.201 72.853 3.670697 3.445601 2.919253 2.580843 1993 6.5 2.320192 2.71 2.83 3.1 5.5 2.090511 1994 1995 1996 5.6 1.996612 2.278554 5.4 2.35 2.57 23 1997 1998 74.376 75.861 77.168 78.395 79.228 80.547 82.593 4.7 4.4 1.85 4 1.81 1999 2000 1.722888 1.590037 1.062568 1.664815 2.540132 1.978376 1.690669 1.978961 3.9 2.26 2001 5.7 84.227 1.74 2002 6 1.93 5.7 85.651 887.346 90.049 2003 2004 1.76 5.4 3.094589 2 2.113549 1.93826 1.761255 1.446277 1.474993 1.887015 1.99261 1.944288 1.948474 2.367496 2.848498 2.898782 2.780581 2.376455 1.474755 1.445341 1.56596 1.704026 2005 4.9 93.1 3.388155 2006 4.4 95.58 2.663802 2.19 2.27 2.24 2007 5 97.956 2008 7.3 99.815 100.169 1.94 1.48 2009 9.9 2.485876 1.897791 0.3546561 1.776997 1.930377 1.835118 2010 93 1.52 193 2011 8.5 101.949 103.917 105.824 107.301 2012 79 1.99 2013 6.7 1.395714 1.81 2014 5.6 108.639 1.246959 1.672596 1.87 year = Year of observation urate = Civilian unemployment rate (in %) gdpdef = Gross Domestic Product Implicit Price Deflator (GDPDEF) inflgdp = Annual inflation rate using GDP implicit price deflator (in %) pastinflgdp = Weighted average of past 4 years of inflgdp (in %) infpgdplyr One-year ahead inflation in GDPDEF Survey of Professional Forecasters (in %) (d) (1pt) Estimate now a model of inflation from 1970 to 2014, using unemployment and expected inflation as the only regressors. Report the SRL, (default) standard errors, t-statistics, p-values, R-squared, and number of observations in a compact format. 4 (e) (1pt) Using your results from (d), test if the relationship described in (c) still holds. (f) (1pt) Using your results from (d), provide evidence for or against Milton Friedman's argument that in the long run, inflation is driven by inflation expectations. (g) (1pt) Which CLRM assumption is likely to be violated in this data set? Does this affect your results in (b) and (d)? Briefly explain why (not). year lurate 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 gdpdef inflgdp pastinflgdp infpgdp1yr 6.6 13.518 -1.965335 4.3 14.09 4.231395 3.1 14.869 5.528744 2.7 15.091 1.493039 3.474261 4.5 15.219 0.8481877 2.905584 5 15.343 0.814771 2.316075 4.2 15.743 2.607052 1.431847 4.2 16.264 3.309407 1.606194 5.2 16.711 2.748401 2.353652 6.2 17.123 2.465442 2.69507 5.3 17.326 1.18554 2.733284 6.6 17.56 1.350571 2.09447 6 17.745 1.053531 1.663819 5.5 17.938 1.08763 1.310236 5.5 18.216 1.549783 1.13978 5 18.476 1.427317 1.291965 4 18.853 2.040485 1.358741 3.8 19.481 3.331035 1.663108 3.8 20.067 3.008059 2.385001 3.4 20.999 4.644441 2.753363 3.5 22.071 5.105005 3.63045 6.1 23.182 5.033755 4.370049 3.54 6 24.288 4.770943 4.774697 3.42 5.2 25.366 4.438406 4.903949 3.7 4.9 27.077 6.74525 4.723897 5.37 7.2 29.923 10.51077 5.487186 7.68 8.2 32.139 7.405674 7.592657 6.21 7.8 33.815 5.214848 7.90839 5.73 6.4 36.036 6.568091 7.08432 5.96 6 38.661 7.284382 6.723902 7.09 6 41.986 8.600398 6.667717 8.19 7.2 46.046 9.66989 7.460577 9.37 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 8.5 49.863 10.8 52.483 54.219 1981 1982 1983 1984 1985 1986 7.52 5.59 5.53 88.289536 5.254397 3.307738 3.430532 2.958327 88.3 7.3 56.079 88.561761 8.665299 7.382638 5.524311 4.244367 3.399477 2.649122 2.68621 7 57.738 4.41 3.97 3.11 1.861859 6.6 5.7 58.8813 60.567 1987 2.982334 3.62 1988 5.3 62.859 4.37 3.98 5.4 65.122 3.784239 3.600121 3.838948 1989 1990 3.0766 3.357973 6.3 7.3 67.622 69.643 4.26 3.19 1991 2.988672 2.237124 1992 7.4 71.201 72.853 3.670697 3.445601 2.919253 2.580843 1993 6.5 2.320192 2.71 2.83 3.1 5.5 2.090511 1994 1995 1996 5.6 1.996612 2.278554 5.4 2.35 2.57 23 1997 1998 74.376 75.861 77.168 78.395 79.228 80.547 82.593 4.7 4.4 1.85 4 1.81 1999 2000 1.722888 1.590037 1.062568 1.664815 2.540132 1.978376 1.690669 1.978961 3.9 2.26 2001 5.7 84.227 1.74 2002 6 1.93 5.7 85.651 887.346 90.049 2003 2004 1.76 5.4 3.094589 2 2.113549 1.93826 1.761255 1.446277 1.474993 1.887015 1.99261 1.944288 1.948474 2.367496 2.848498 2.898782 2.780581 2.376455 1.474755 1.445341 1.56596 1.704026 2005 4.9 93.1 3.388155 2006 4.4 95.58 2.663802 2.19 2.27 2.24 2007 5 97.956 2008 7.3 99.815 100.169 1.94 1.48 2009 9.9 2.485876 1.897791 0.3546561 1.776997 1.930377 1.835118 2010 93 1.52 193 2011 8.5 101.949 103.917 105.824 107.301 2012 79 1.99 2013 6.7 1.395714 1.81 2014 5.6 108.639 1.246959 1.672596 1.87
