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Example 2.2 discusses Okun s law, as shown in Eq. (2.22). This equation can also be written as Xt = B1 + B2Yt, where X = percent growth in real output, as measured by GDP and Y = change in the unemployment rate, measured in percentage points. Using the data given in Table 2-13 on the textbook s Web site,
a. Estimate the preceding regression, obtaining the usual results as per Eq. (3.46).
b. Is the change in the unemployment rate a significant determinant of percent growth in real GDP? How do you know?
c. How would you interpret the intercept coefficient in this regression? Does it have any economic meaning? |
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