Let gGDP; denote the annual percentage change in gross domestic product and let int denote a short term interest rate. Suppose that gGDP; is related to interest rates by 9GDP; = ao + Bo int; + B1 int.1 + B2 int-2 + B3 int-3 + U; where u; is uncorrelated with intţ, intţ-1, int-2, int-3 and all other past values of interest rates. Suppose you have a time series data set that includes the inflation rate and the growth rate in Turkey over the past 18 years. Using this data set you estimated the above model as GGDP;= ao - 0.2 int - 0.3 int,-1 + 0.1 intţ-2 + 0.1 int-3 + Ut Given the above information answer the following questions. The number of observations in the time series data set that you have is The model that you regressed is a finite distributed lag model of order Suppose that int is equal to 15% in all time periods before time t. At time t, suppose int increases to 16% and then reverts back to 15% at time t+1. The impact multiplier is Now, suppose that int is equal to 15% in all time periods before time t. At time t, suppose int increases to 16% and remains at 16% permanently. TI long-run multiplier, given this permanent increase in int, is equal to

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Let gGDP; denote the annual percentage change in gross domestic product and let int; denote a short term interest rate. Suppose that gGDP; is related to
interest rates by
GGDP; = do + Bo int; + B1 int-1 + ß2 int-2 + ß3 int-3 + Ut
where u; is uncorrelated with int, int-1, int-2, int-3 and all other past values of interest rates.
Suppose you have a time series data set that includes the inflation rate and the growth rate in Turkey over the past 18 years.
Using this data set you estimated the above model as
GGDP;= a0 - 0.2 intţ - 0.3 intţ-1 + 0.1 int-2 + 0.1 intţ-3 + Ut
Given the above information answer the following questions.
The number of observations in the time series data set that you have is
The model that you regressed is a finite distributed lag model of order
Suppose that int is equal to 15% in all time periods before time t. At time t, suppose int increases to 16% and then reverts back to 15% at time t+1.
The impact multiplier is
Now, suppose that int is equal to 15% in all time periods before time t. At time t, suppose int increases to 16% and remains at 16% permanently. The
long-run multiplier, given this permanent increase in int, is equal to
Transcribed Image Text:Let gGDP; denote the annual percentage change in gross domestic product and let int; denote a short term interest rate. Suppose that gGDP; is related to interest rates by GGDP; = do + Bo int; + B1 int-1 + ß2 int-2 + ß3 int-3 + Ut where u; is uncorrelated with int, int-1, int-2, int-3 and all other past values of interest rates. Suppose you have a time series data set that includes the inflation rate and the growth rate in Turkey over the past 18 years. Using this data set you estimated the above model as GGDP;= a0 - 0.2 intţ - 0.3 intţ-1 + 0.1 int-2 + 0.1 intţ-3 + Ut Given the above information answer the following questions. The number of observations in the time series data set that you have is The model that you regressed is a finite distributed lag model of order Suppose that int is equal to 15% in all time periods before time t. At time t, suppose int increases to 16% and then reverts back to 15% at time t+1. The impact multiplier is Now, suppose that int is equal to 15% in all time periods before time t. At time t, suppose int increases to 16% and remains at 16% permanently. The long-run multiplier, given this permanent increase in int, is equal to
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