Question
Suppose that the country adopted inflation targeting strategy in 2005. Using a dummy variable approach, show how you test if the ERPT coefficient has
Suppose that the country adopted inflation targeting strategy in 2005. Using a dummy variable approach, show how you test if the ERPT coefficient has changed (structural break) with the adaptation of inflation targeting strategy (before and after 2005). Explain the steps of the test technically and how you interpret the result practically. (20 pt)
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Macroeconomics
Authors: Robert J Gordon
12th edition
138014914, 978-0138014919
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