Suppose You Include Seasonality Controls in Your Model of U

question 19

Essay

Suppose you include seasonality controls in your model of U.S.Personal Consumption Expenditures (billions)on U.S.Personal Income (billions)using quarterly data for the period 1969Q1-2013Q3 and you get $$\begin{array} { c } \text { Consumption } _ { t } =& - 143.783 +& 0.822 \text { Income } _ { t } - & 1.782 Q 2 _ { t } + & 11.431 Q 3 _ { t } -& 0.073 Q 4 _ { t } \\& ( 15.775 ) & ( 0.002 )& ( 18.098 ) & ( 18.099 ) & ( 18.200 ) \\& & { n } = 179 \\& & R ^ { 2 } = .9994\end{array}$$
A)Explain how you would create Q2_t,Q3_t,and Q4_t.
B)Interpret the coefficients on Q2_t,Q3_t,and Q4_t and comment on their statistical significance.

• A)Explain how you would create Q2_t,Q3_t,and Q4_t.
• B)Interpret the coefficients on Q2_t,Q3_t,and Q4_t and comment on their statistical significance.

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Definitions:

Student t

A distribution that is used in hypothesis testing, especially for small sample sizes, when the population standard deviation is unknown.

χ

This commonly represents the Greek letter chi, which can denote a variable, statistic, or characteristic in various scientific fields. Without further context, a specific definition cannot be provided.

Negative Values

Numbers that are less than zero, often representing a deficit or decrease in mathematical calculations or data sets.

Student t

A probability distribution used in small-sample hypothesis testing and in constructing confidence intervals when the population standard deviation is unknown.