Table 5-13 gives data on the Consumer Price Index, Y(1980 = 100), and the money supply, X

Question:

Table 5-13 gives data on the Consumer Price Index, Y(1980 = 100), and the money supply, X (billions of German marks), for Germany for the years 1971 to 1987.
CONSUMER PRICE INDEX (Y)(1980 = 100) AND THE MONEY
SUPPLY (X)(MARKS, IN BILLIONS), GERMANY, 1971-1987

a. Regress the following:
1. Y on X
2. In Y on In X
3. In y on X
4. Y on In X
b. Interpret each estimated regression.
c. For each model, find the rate of change of y with respect to X.
d. For each model, find the elasticity of y with respect to X. For some of these models, the elasticity is to be computed at the mean values of y and X.
e. Based on all these regression results, which model would you choose and why?