When interest rates are high, fewer people can afford to borrow to buy a new home.For this reason, new home construction is likely to decline with interest rates.Consider the following model (using the dataset: house_starts.dat, POE).

STARTSt = 1 + 2 FIXED_RATEt + et

whereSTARTS = housing starts by monthFIXED_RATE = the average 30-year fixed mortgage rate (annual interest rate) by month(so, for example, FIXED_RATE =1.0 means 1% annual rate).

Summary statistics, using the observations 1 - 184

	mean	Median	Min	Max	SD
Fixed rate	7.6508	7.6570	5.5000	10.220	1.1463
Starts	1506.7	1525.5	798.00	2228.0	272.91

Model 1: OLS, using observations 1-184 Dependent variable: STARTS

	coefficent	sed.error	t-ratiop	p-value
const	2992.74	78.9515	37.91	266e-088
Fixed_Rate	-194.223	10.2061	smudge	smudge

Mean dependent var 1506.696

S.D. dependent var 272.9083

Sum squared resid 4558359

S.E. of regression 158.2590

i. Is this a time series or cross section dataset?ii. What is the ordinary least squares estimate of the intercept, 1? What is

the estimate of the slope, 2?

iii. Unfortunately, someone smudged the t-ratio and p-value for the slopecoefficient. What is the t statistic? Is the coefficient significantly

different from zero at the 1% level?

iv. In what units is b1 measured?v. Interpret the coefficient estimates. What does the estimate b1 mean in

words? What does the estimate b2 mean in words?

vi. If 30-year fixed mortgage rates rise by 2 percentage points, how much doyou estimate that housing starts will fall? What if the mortgage rate rises

by 5 percentage points?