The data file inflation.xlsx contains quarterly observations on the inflation rates in Germany and France from 1990Q1 to 2014Q4. For any hypothesis tests in the following questions, use a 5% significance level.

a) Plot each of the series with titles. (6 marks)

b) Test the stationary of all variables. (12 marks)

c) Specify and estimate an equation relating Germany's current exchange rate to past exchange rates in France and Germany. (12 marks)

dateid01	france	germany
1/1/1990	3.382	2.765
1/4/1990	3.052	2.435
1/7/1990	3.179	2.736
1/10/1990	3.438	3.021
1/1/1991	3.272	2.84
1/4/1991	3.244	3.269
1/7/1991	3.221	4.438
1/10/1991	2.909	5.425
1/1/1992	2.893	5.959
1/4/1992	2.869	6.043
1/7/1992	2.171	4.958
1/10/1992	1.884	3.338
1/1/1993	2.142	4.664
1/4/1993	1.859	4.342
1/7/1993	2.125	4.588
1/10/1993	1.982	4.307
1/1/1994	1.704	2.883
1/4/1994	1.695	2.861
1/7/1994	1.691	2.581
1/10/1994	1.684	2.452
1/1/1995	1.675	2.166
1/4/1995	1.667	1.643
1/7/1995	1.79	1.509
1/10/1995	1.911	1.511
1/1/1996	2.155	1.372
1/4/1996	2.396	1.493
1/7/1996	1.759	1.363
1/10/1996	1.75	1.489
1/1/1997	1.489	1.845
1/4/1997	0.862	1.593
1/7/1997	1.358	2.323
1/10/1997	1.106	2.2
1/1/1998	0.733	1.208
1/4/1998	0.977	1.327
1/7/1998	0.609	0.597
1/10/1998	0.243	0.359
1/1/1999	0.243	0.239
1/4/1999	0.363	0.476
1/7/1999	0.484	0.713
1/10/1999	1.091	0.954
1/1/2000	1.453	1.548
1/4/2000	1.566	1.185
1/7/2000	1.928	1.297
1/10/2000	1.799	1.771
1/1/2001	1.313	1.641
1/4/2001	2.017	2.459
1/7/2001	1.773	2.095
1/10/2001	1.413	1.624
1/1/2002	2.12	2.076
1/4/2002	1.628	1.371
1/7/2002	1.742	1.14
1/10/2002	2.207	1.256
1/1/2003	2.422	1.13
1/4/2003	1.945	0.789
1/7/2003	1.941	1.127
1/10/2003	2.159	1.127
1/1/2004	1.802	0.894
1/4/2004	2.357	1.79
1/7/2004	2.24	1.784
1/10/2004	2.113	2.007
1/1/2005	1.659	1.661
1/4/2005	1.645	1.319
1/7/2005	1.972	1.643
1/10/2005	1.634	1.639
1/1/2006	1.85	1.743
1/4/2006	1.942	1.844
1/7/2006	1.611	1.509
1/10/2006	1.286	1.29
1/1/2007	1.068	1.713
1/4/2007	1.164	2.023
1/7/2007	1.268	2.229
1/10/2007	2.328	3.079
1/1/2008	2.96	2.947
1/4/2008	3.347	2.923
1/7/2008	3.34	3.115
1/10/2008	1.861	1.648
1/1/2009	0.616	0.818
1/4/2009	-0.202	0.203
1/7/2009	-0.505	-0.302
1/10/2009	0.305	0.405
1/1/2010	1.327	0.811
1/4/2010	1.623	1.113
1/7/2010	1.624	1.111
1/10/2010	1.619	1.413
1/1/2011	1.813	1.911
1/4/2011	2.096	2.002
1/7/2011	2.098	2.198
1/10/2011	2.49	2.189
1/1/2012	2.374	2.172
1/4/2012	1.955	1.865
1/7/2012	1.957	2.053
1/10/2012	1.555	2.045
1/1/2013	1.063	1.546
1/4/2013	0.767	1.541
1/7/2013	0.96	1.628
1/10/2013	0.574	1.336
1/1/2014	0.669	1.142
1/4/2014	0.666	1.044
1/7/2014	0.38	0.848
1/10/2014	0.285	0.471