You Have Collected Data for Real GDP (Y)and Have Estimated $\hat { Y }$

question 49

Essay

You have collected data for real GDP (Y)and have estimated the following function:
ln $\hat { Y }$ _t = 7.866 + 0.00679×Zeit
(0.007)(0.00008)
t = 1961:I - 2007:IV, R² = 0.98, SER = 0.036
where Zeit is a deterministic time trend, which takes on the value of 1 during the first quarter of 1961, and is increased by one for each following quarter.
a. Interpret the slope coefficient. Does it make sense?
b. Interpret the regression R². Are you impressed by its value?
c. Do you think that given the regression R², you should use the equation to forecast real GDP beyond the sample period?

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Definitions:

Constriction

The process of narrowing, tightening, or compressing, often referring to blood vessels or muscles.

Respiration

The process of breathing, involving the inhalation of oxygen and the exhalation of carbon dioxide, crucial for cellular metabolism.

Excitability

The capability of a cell to respond to a stimulus, characteristic of nerve and muscle cells.

Nervous System

The nervous system is the network of nerve cells and fibers that transmits nerve impulses between parts of the body, coordinating bodily functions and responding to internal and external stimuli.