Answered: Interest rate Inflation 1999 4.7 4.4…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Question: The Following data is given for the period 1999-2003

a. According to Fisher Equation “a rise in inflation also rises the nominal interest rate by the same amount”. Construct a regression model by determining dependent and independent variables according to this theory.

b. Obtain residuals of the regression. Calculate variance of the residuals and the standard errors of the parameters.

c. Test significance of the slope parameter (the parameter of the independent variable) at 5% significance level. Is it in line with the proposition?

d. Evaluate the overall significance of the model with R² and F test.

Interest
rate
Inflation
1999
2000
4.7
4.4
4.6
5.4
2001
6.3
5.7
2002
4.8
4.6
2003
2.9
2.4

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