Use the data in PHILLIPS.RAW to answer these questions.(i) Using the entire data set, esti...

Use the data in PHILLIPS.RAW to answer these questions.

(i) Using the entire data set, estimate the static Phillips curve equation inf1 = β0 + β1 unemt + ut by OLS and report the results in the usual form.

(ii) Obtain the OLS residuals from part (i), ût, and obtain p from the regression ût on ût-1. (It is fine to include an intercept in this regression.) Is there strong evidence of serial correlation?

(iii) Now estimate the static Phillips curve model by iterative Prais-Winsten. Compare the estimate of β1 with that obtained in Table 12.2. Is there much difference in the estimate when the later years are added?

(iv) Rather than using Prais-Winsten, use iterative Cochrane-Orcutt. How similar are the final estimates of p? How similar are the PW and CO estimates of β1?

Dependent Variable: inf