in = a + B inflation, + B output_gap, + & where i, is the log of the interest rate, inflation, is the inflation rate, output_gap, is the difference between the actual level of output and the potential one, &, is a random error term and t is time. You estimate the model via OLS using quarterly data from Jar 1971 to June 2014. Results are reported in Table 1: Table 1: OLS estimates using 174 observations Dependent variable: Interest rate (i) LCOI Variable Coefficient Std. Error t-Statistic Prob. INFLATION OUTPUT_GAP 1.521393 0.084479 0.036562 0.050336 0.007566 0.024354 30.22492 11.16586 1.501276 0.0000 0.0000 0.1351 R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.430472 Mean dependent var 0.423811 S.D. dependent var 0.379786 Akaike info criterion 24.66454 Schwarz criterion -76.92440 Hannan-Quinn criter. 64.62443 Durbin-Watson stat 0.000000 1.982793 0.500330 0.918671 0.973138 0.940766 0.075132 a) Interpret the estimated coefficients and discuss their statistical significance. [7 marks] b) You want to evaluate the goodness of fit of your model. Which information in Table 1 do you consider? Discuss. ois [8 marks] c) Interpet the value of the F-statistic in Table 1 and its probability. 15 marks in = a + B inflation, + B output_gap, + & where i, is the log of the interest rate, inflation, is the inflation rate, output_gap, is the difference between the actual level of output and the potential one, &, is a random error term and t is time. You estimate the model via OLS using quarterly data from Jar 1971 to June 2014. Results are reported in Table 1: Table 1: OLS estimates using 174 observations Dependent variable: Interest rate (i) LCOI Variable Coefficient Std. Error t-Statistic Prob. INFLATION OUTPUT_GAP 1.521393 0.084479 0.036562 0.050336 0.007566 0.024354 30.22492 11.16586 1.501276 0.0000 0.0000 0.1351 R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.430472 Mean dependent var 0.423811 S.D. dependent var 0.379786 Akaike info criterion 24.66454 Schwarz criterion -76.92440 Hannan-Quinn criter. 64.62443 Durbin-Watson stat 0.000000 1.982793 0.500330 0.918671 0.973138 0.940766 0.075132 a) Interpret the estimated coefficients and discuss their statistical significance. [7 marks] b) You want to evaluate the goodness of fit of your model. Which information in Table 1 do you consider? Discuss. ois [8 marks] c) Interpet the value of the F-statistic in Table 1 and its probability. 15 marks