Suppose the two time series yt and zt, are determined by the following reduced form system, yt 1 0.5 0.2yt1e1t and e1t 0.8 0.2yt zt 0.6 0.3 0.6zt1 e2t e2t 0 0.5zt where, yt and zt are fundamental shocks for yt and zt, respectively. (1) Suppose this is the correct model, that is there is no serial correlation in e1 and e2, respectively, and the standard error for 12 and are 21 are 0.08 and 0.18, respectively, test the Granger causality of z for y. (2) If the last observations are y60 =1.2 and z60 = 2, what is your predicted value of y60(2)? (3) In order to be consistent with the Sim's approach, what is the structure VAR form for this system? (4) Compute the first two impulse response of yt to a one-unit shock in zt