The chief financial officer of a major service company has asked you to develop a regression model to predict consumption of service goods as a function of GDP and other important variables. The data for your analysis are found in the data file
Macro2010, which is stored on your data disk and described in the data dictionary in the chapter appendix. Use data from the period 1980.1 through 2010.4.
a. Estimate a regression model using only GDP to predict consumption of service goods. Test for autocorrelation using the Durbin-Watson statistic.
b. Estimate a multiple regression model using GDP, total consumption lagged 1 period, imports or services, and prime interest rate as additional predictors. Test for autocorrelation. Does this multiple regression model reduce the problem of autocorrelation?