Use the data in Problem 12.8, but now consider the following models:
In PCEt = A1 + A2In PDIt + ut
In PCEt = B1 + B2In PDIt + B3 In PCEt-1 + vt
where In = the natural log.
a. Interpret these regressions.
b. What is the short- and long-run elasticity of PCE with respect to PDI?