12. Assume that the general fertility rate (gfrt) follows an FDL model of order 2 with respect to pe, personal tax exemption. gfrt = ao+Sopet + S₁pet-1 +8₂pet-2 + ut Estimating &, can be imprecise because of correlation between the pet, pet-1, and pet-2, making it difficult to estimate the long run propensity. Let 0 = do +8₁ +8₂, the long run propensity. a. Rewrite the model substituting out do. b. Explain the regression you would run to estimate ? c. o should have a ceteris paribus interpretation. If pet - pet and pet-2 - pet are held fixed but pet is increasing, what must be true about changes in pet-1 and pet-2? d. How does your answer in part (c) help you to interpret 0, in the equation solved for in (a) and (b)?

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