In examining the relationship between the unemployment rate and the growth rate
ID: 3255483 • Letter: I
Question
In examining the relationship between the unemployment rate and the growth rate of real GDP, Atems (2013) obtains the following results: Y^cap_t = 0.85 - 0.03U_t se = () (0.025) (3.067) () where Y_t is growth rate of output, and U_t is the unemployment rate. (a) Interpret the estimates of the slope and intercept (b) Are the estimates of the slope and intercept statistically significant? How do you know? (c) Is the estimate of the slope realistic for the U.S. economy? (Sign and significance) Explain why or why not.Explanation / Answer
slope gives you the idea of increase in Y per unit increase in U , in our case unit increase in U , decreases an ammount of 0.03 , and the intercept gives you the value without concerning about what affects Y
b )
The estimate of intercept contain zero in the confidence region of [ intercept - 2 * sigma , intercept + 2*sigma ] = [-2.217 3.917 ] , this interval contains zero with 95 % probability , so this is not significant
same thing can be done for the slope extimate , but this estimate is significant