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Economics

There is a dataset on upload file. It is a time series model of consumption.
a) given the model C = f( GDP, Yd, and PR) where C = Consumption, GDP is GDP, Yd is personal income, and PR is the prime rate, state the hypothesis of each of these variables.

b) run the model above and test the hypotheses at the 1 and 5% levels using an asterisk (*) for statistically significant and the 5% and ** for the 1%. Provide the printout in David- acceptable format.

c) since this is a time series dataset you are concerned about the existence of serial correlation. Test this at the 5% level using the durbin-watson d statistic. What was the result of the test.

d) plot the residuals of this model and see if you detect any visual sign of positive or negative serial correlation? Display this graph on your HW.
e) Whether or not you found any evidence of serial correlation you would want to re-estimate the model with Newey-West robust standard errors. What are your results of this model? How do they compare with the results of the first model?

e) Do you detect any other problems from among the several that we have considered at this point?
f) What suggestions would you make to run a better model?

OBS CONSUMPTION GDP PERSONALINC PRIMERATE
1947:1 156.6000061 237.5 167.8000031 1.5
1947:2 160.5 240.6999969 165.8000031 1.5
1947:3 164.1000061 244.8999939 173.5 1.5
1947:4 168.1999969 254.6999969 175.8999939 1.583333333
1948:1 170.8999939 260.7999878 181.3999939 1.75
1948:2 174.6999969 267.7000122 188.8000031 1.75
1948:3 177.6000061 274.2999878 195.3000031 1.916666667
1948:4 178.5 275.6000061 195.1000061 2
1949:1 177.3999939 270.3999939 189.8999939 2
1949:2 179 266.6000061 189.3000031 2
1949:3 178.3000031 268 189.1999969 2
1949:4 180.8000031 265.6000061 190.8999939 2
1950:1 183.6000061 275.7000122 204.3999939 2
1950:2 187.5 285.1000061 204.1999969 2
1950:3 201.1999969 302.5 211.6999969 2.026666641
1950:4 198.6000061 313.8999939 217.8999939 2.25
1951:1 209.6999969 329.2999878 224.5 2.480000019
1951:2 205.3000031 336.8999939 229.6000061 2.5
1951:3 207.8999939 343.7000122 231.6999969 2.5
1951:4 211.8999939 348.1000061 235.1000061 2.73999993
1952:1 213.3000031 351.5 236 3
1952:2 217.3999939 352.3999939 238.6000061 3
1952:3 219.8999939 358.7999878 245 3
1952:4 228 371.7999878 250.3999939 3
1953:1 231.6000061 378.8999939 254.5 3
1953:2 233.5 382.5 258.7999878 3.176666657
1953:3 234.5 381.7000122 259.2999878 3.25
1953:4 234.1999969 376.6000061 259.5 3.25
1954:1 236.3999939 376 261.7999878 3.210000038
1954:2 239.1000061 376.7000122 261.1000061 3
1954:3 241.3999939 381.5 263.5 3
1954:4 246 390.1000061 269 3
1955:1 252.1999969 403.1000061 273.7000122 3
1955:2 257.2000122 411.3999939 280.1000061 3
1955:3 261.5 419.8999939 286.3999939 3.160000006
1955:4 265.6000061 426.3999939 290.6000061 3.466666698
1956:1 267.2000122 428.7999878 294.2999878 3.5
1956:2 269.7000122 434.7000122 299.5 3.716666698
1956:3 272.7999878 439.7000122 303.5 3.863333305
1956:4 278 448.6000061 309.8999939 4
1957:1 282.2999878 457.6000061 312.8999939 4
1957:2 284.5 459.6000061 317 4
1957:3 289.1000061 466.7999878 321.3999939 4.306666692
1957:4 290.8999939 462 321.8999939 4.5
1958:1 290.5 454.6000061 322 4.113333384
1958:2 293.5 458.8999939 325 3.609999975
1958:3 298.6000061 472.3999939 332.7999878 3.609999975
1958:4 302.5 485.7999878 338.1000061 4
1959:1 310.4190063 496.1000061 343.6000061 4
1959:2 316.4769897 509.2000122 351.2999878 4.24333334
1959:3 321.7200012 510.2000122 352.7999878 4.666666667
1959:4 323.8909912 514.2000122 357.3999939 5
1960:1 327.3980103 527.9000244 362 5
1960:2 333.3039856 527.0999756 365.8999939 5
1960:3 333.2739868 529.9000244 367.6000061 4.783333302
1960:4 335.1940002 524.5999756 369.2000122 4.5
1961:1 335.6830139 528.9000244 372.8999939 4.5
1961:2 340.5950012 539.9000244 378.3999939 4.5
1961:3 343.5159912 550.2999878 385.1000061 4.5
1961:4 350.8179932 563.4000244 393.2000122 4.5
1962:1 356.006012 576.7999878 397.8999939 4.5
1962:2 361.644989 583.9000244 404.2000122 4.5
1962:3 365.5499878 591 408 4.5
1962:4 371.8450012 594.4000244 412.3999939 4.5
1963:1 375.4159851 603.4000244 416.6000061 4.5
1963:2 379.5159912 612.0999756 421.2999878 4.5
1963:3 386.4779968 624.9000244 428.2999878 4.5
1963:4 391.1300049 634.2999878 437 4.5
1964:1 400.6640015 650.4000244 447.5 4.5
1964:2 408.644989 659.5999756 460.2999878 4.5
1964:3 417.5249939 671.2000122 468.2999878 4.5
1964:4 420.1069946 676.2999878 475.7000122 4.5
1965:1 430.8590088 696.5 481.8999939 4.5
1965:2 437.8760071 709 490.1000061 4.5
1965:3 447.1570129 726.2000122 505.7999878 4.5
1965:4 461.2609863 748.7000122 518 4.640000025
1966:1 471.8460083 772.2999878 526.5999756 5.116666635
1966:2 477 781.5 532.2000122 5.50666666
1966:3 486.1900024 794.7999878 543.4000244 5.876666705
1966:4 492.0400085 808.5999756 554.0999756 6
1967:1 496.3309937 819.2999878 563.4000244 5.806666692
1967:2 505.4519958 823.9000244 570.4000244 5.5
1967:3 512.7139893 838.7000122 581 5.5
1967:4 520.2769775 854.4000244 590.0999756 5.726666609
1968:1 538.0969849 881.4000244 607 6
1968:2 551.9060059 905.7000122 623.5 6.399999936
1968:3 568.0479736 920.9000244 631.5 6.466666698
1968:4 576.8560181 937.7999878 642.7999878 6.266666571
1969:1 588.8729858 961.9000244 649.9000244 7.063333193
1969:2 600.21698 977 664.7000122 7.743333181
1969:3 610.4979858 997.2000122 686.0999756 8.5
1969:4 622.473999 1005.299988 699.0999756 8.5
1970:1 633.6740112 1018.200012 711.0999756 8.463333448
1970:2 643.7860107 1034.400024 731.2000122 8
1970:3 655.8309937 1051.900024 748.2999878 7.943333308
1970:4 662.5020142 1054.199951 755.4000244 7.233333429
1971:1 681.6610107 1099.900024 777.5999756 5.883333365
1971:2 695.6920166 1120.599976 797.9000244 5.390000025
1971:3 708.0159912 1140.800049 808.7999878 5.966666698
1971:4 724.2890015 1153.099976 822.5 5.623333136
1972:1 741.7020264 1192.5 835.9000244 4.893333276
1972:2 759.8709717 1227.5 848.7000122 5.00666666
1972:3 778.1760254 1252 874.5999756 5.339999994
1972:4 803.1459961 1289.699951 915.2999878 5.75666666
1973:1 827.8569946 1338.400024 938.5999756 6.106666724
1973:2 843.0540161 1374.400024 965.5999756 7.033333302
1973:3 861.8900146 1394.099976 989.4000244 9.129999797
1973:4 877.2459717 1435.300049 1022.400024 9.813333193
1974:1 895.3579712 1450 1037 9.256666501
1974:2 923.5629883 1487.599976 1056.599976 10.93666681
1974:3 951.440979 1514.800049 1087.199951 11.99333318
1974:4 959.1500244 1551.599976 1108.199951 11.00333341
1975:1 984.4110107 1567.199951 1120.5 8.980000019
1975:2 1013.671997 1603.099976 1187.099976 7.323333422
1975:3 1047.246948 1659.900024 1192.900024 7.563333352
1975:4 1076.040039 1710.5 1225.099976 7.583333492
1976:1 1111.064941 1770.300049 1259.400024 6.833333333
1976:2 1131.140991 1803.099976 1281.099976 6.899999936
1976:3 1160.81604 1837 1313.800049 7.086666743
1976:4 1196.073975 1885.300049 1345.199951 6.543333371
1977:1 1231.590942 1939.099976 1377.800049 6.25
1977:2 1260.287964 2006.599976 1411.5 6.469999949
1977:3 1291.868042 2067.5 1454.400024 6.903333346
1977:4 1329.909058 2112.399902 1500.199951 7.673333327
1978:1 1359.843018 2150.399902 1540 7.976666609
1978:2 1418.984009 2276.600098 1594.099976 8.300000191
1978:3 1452.147949 2338.5 1639.199951 9.140000025
1978:4 1490.598999 2418 1685.800049 10.80999978
1979:1 1531.550049 2470.899902 1739.099976 11.75
1979:2 1566.86499 2529.300049 1774.900024 11.71666654
1979:3 1620.146973 2601.5 1829.300049 12.11666648
1979:4 1666.465942 2663.800049 1889.699951 15.08000024
1980:1 1716.046021 2732.899902 1959 16.39666653
1980:2 1719.281006 2736.899902 1972.099976 16.32333342
1980:3 1777.094971 2793.600098 2032.099976 11.60999966
1980:4 1839.194946 2918.800049 2115.899902 16.73333327
1981:1 1893.069946 3052.600098 2174.399902 19.21333313
1981:2 1926.694946 3086.199951 2201.199951 18.93000031
1981:3 1970.470947 3183.5 2289.600098 20.3233331
1981:4 1986.365967 3203.100098 2326.399902 17.01333364
1982:1 2022.999023 3193.800049 2350.399902 16.26999982
1982:2 2048.782959 3248.899902 2387.600098 16.5
1982:3 2093.700928 3278.600098 2429.199951 14.71666686
1982:4 2151.741943 3315.600098 2459.899902 11.95666695
1983:1 2188.403076 3378.5 2495.199951 10.8799998
1983:2 2259.985107 3489.600098 2541.800049 10.5
1983:3 2319.443115 3582.899902 2614.899902 10.79666678
1983:4 2377.888916 3688.800049 2692.100098 11
1984:1 2427.146973 3813.399902 2782 11.07000001
1984:2 2481.383057 3909.399902 2860.300049 12.30666701
1984:3 2517.092041 3974.699951 2934.100098 12.99000009
1984:4 2567.995117 4033.5 2974.100098 11.8033336
1985:1 2632.89502 4109.700195 3004.899902 10.53666655
1985:2 2682.090088 4170.100098 3090.399902 10.19666672
1985:3 2749.791016 4252.899902 3095.699951 9.5
1985:4 2785.565918 4319.299805 3155.199951 9.5
1986:1 2825.099121 4375.299805 3213 9.366666794
1986:2 2857.018066 4415.200195 3246.800049 8.609999975
1986:3 2928.579102 4483.399902 3284.300049 7.853333314
1986:4 2969.971924 4537.5 3305.899902 7.5
1987:1 3011.396973 4612.299805 3388.5 7.5
1987:2 3081.530029 4695.799805 3390.5 8.046666781
1987:3 3145.513916 4770.200195 3489.600098 8.399999936
1987:4 3182.908936 4891.600098 3569.199951 8.866666476
1988:1 3259.753906 4957 3642.300049 8.586666743
1988:2 3319.522949 5066.5 3711.100098 8.780000051
1988:3 3386.958008 5151.5 3789.699951 9.710000038
1988:4 3460.094971 5258.299805 3866.600098 10.1833334
1989:1 3511.789063 5379 3952.199951 10.97666677
1989:2 3572.884033 5461.700195 3994.5 11.35666656
1989:3 3626.926025 5527.5 4029 10.65999985
1989:4 3675.066895 5588 4089.399902 10.5
1990:1 3754.775879 5720.799805 4205.100098 10.03666655
1990:2 3806.209961 5800 4271.700195 10
1990:3 3871.580078 5844.899902 4334.100098 10
1990:4 3893.438965 5847.299805 4363.5 10
1991:1 3904.577881 5886.299805 4399.100098 9.190000216
1991:2 3958.570068 5962 4457.5 8.666666667
1991:3 3998.237061 6015.899902 4498.5 8.399999936
1991:4 4023.559082 6080.700195 4544.200195 7.596666654
1992:1 4123.112793 6183.600098 4662 6.5
1992:2 4171.483887 6276.600098 4724.899902 6.5
1992:3 4225.695801 6345.799805 4752.700195 6.00666666
1992:4 4318.318848 6469.799805 4878.700195 6
1993:1 4350.644043 6521.600098 4821.700195 6
1993:2 4421.250977 6596.700195 4924.200195 6
1993:3 4488.180176 6655.5 4948.5 6
1993:4 4558.73877 6795.5 5046.799805 6
1994:1 4613.787109 6887.799805 5018.299805 6.019999981
1994:2 4677.484863 7015.700195 5128.600098 6.896666527
1994:3 4752.991211 7096 5211 7.50333341
1994:4 4821.312988 7217.700195 5303.899902 8.133333206
1995:1 4868.64502 7297.5 5358.100098 8.833333333
1995:2 4943.679199 7342.600098 5382.799805 9
1995:3 5005.211914 7432.799805 5444.399902 8.76666673
1995:4 5058.415039 7529.299805 5505.100098 8.71666654
1996:1 5130.48877 7629.600098 5574.399902 8.333333333
1996:2 5217.984863 7782.700195 5637 8.25
1996:3 5263.650879 7859 5719.799805 8.25
1996:4 5337.869141 7981.399902 5779.700195 8.25
1997:1 5429.899902 8124.200195 5857.299805 8.26666673
1997:2 5470.799805 8279.799805 5924.200195 8.5
1997:3 5575.899902 8390.900391 5999.700195 8.5
1997:4 5640.600098 8478.599609 6091.598145 8.5
1998:1 5719.899902 8627.799805 6220.793945 8.5
1998:2 5820 8697.299805 6327.37793 8.5
1998:3 5895.100098 8816.5 6407.001953 8.49666659
1998:4 5989.10498 8984.5 6467.308105 7.919999917
1999:1 6076.562988 9092.700195 6530.337891 7.75
1999:2 6195.586914 9171.700195 6580.173828 7.75
1999:3 6299.438965 9316.5 6640.518066 8.103333473
1999:4 6414.462891 9516.400391 6758.440918 8.373333295
2000:1 6552.162109 9649.5 6955.333008 8.686666489
2000:2 6638.731934 9820.700195 7077.245117 9.24666659
2000:3 6736.098145 9874.799805 7188.208008 9.5
2000:4 6807.984863 9953.599609 7259.84082 9.5
2001:1 6904.658203 10028.09961 7317.541992 8.623333295
2001:2 6959.844238 10049.90039 7340.033203 7.339999994
2001:3 6983.746094 10097.7002 7524.229004 6.566666762
2001:4 7099.926758 10152.90039 7391.181152 5.156666756

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