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You will find a dataset called Yagg. Each column of the data Yagg include quarterly US data from 1947Q1 to 2008Q4 on: - a narrative

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You will find a dataset called Yagg. Each column of the data Yagg include quarterly US data from 1947Q1 to 2008Q4 on: - a "narrative\" measure of government spending shock (&) - log of real government spending (Gy) - log of real GDP - interest rates - average marginal tax rate - log of real nondurable consumption (C;) Estimate a reduced-form VAR(4) with these variables, including a de- terministic and a quadratic time trend (that is, and *). Then, using a recursive identification procedure with these variables in this order, plot the impulse response of C; to the government spending shock; normalize the re- sponse in the plot such that it corresponds to the response of C; associated with a government spending shock that results in a unitary increase in gov- ernment spending (G;) on impact. By how much does a unitary increase in G; affect C; after 4 quarters

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