Suppose you are interested in predicting the three-month government bond rate based on factors listed in the excel file intdef.xls.

The definition of the variables of interest is presented in the table below:

Variable	Definition / Unit
I3	three-month government bond rate.
inf	inflation rate based on the consumer price index.
def	government budget deficit as a percentage of the GDP.

Consider the following model:

I3_t = B₀ + B₁inf_t +B₂def_t +u_t

B1. Test the hypothesis in part 8 using Durbin Watson test. What do you conclude?(3 marks)

B2. What are the limitations for Durbin Watson test for autocorrelation?(2 marks)