Apply OLS regression with money supply measures

Reference no: EM132927094

MONEY SUPPLY AND FINANCIAL MEASURES COMPOUND ANNUAL GROWTH RATES

Question 1: Compute the rate of change in: M1, M2, S&P 500, CPI and ConsCredit. That is, compute the year-to-year changes in the growth rates of these variables.

Prepared in Sheets - Money Supply, S&P 500, CPI, PPI, Consumer Credit and GDP

Question 2: Calculate the year-to-year changes in the Federal funds rate.

Prepared in Sheet - Federal Interest

Question 3: Create a correlation matrix using the results from (1) and (2).

Prepared in Sheet - Correlation Matrix

Question 4: Using the correlation matrix, discuss the relationships between:
a. The rates of change in M1, M2, and the yearly changes in inflation.
b. The year-to-year changes in the Fed Funds rate and CPI, PPI.
c. Consumer credit to the rate of change in M2 and the growth rate of GDP.
d. The rate of change in M2 and the growth rate of the S&P 500 index.

Prepared in Sheet - Correlation Matrix

Question 5: Graph the growth rates of the variables and discuss noticeable time trends.

Prepared in Sheets - Money Supply, S&P 500, CPI, PPI, Consumer Credit, GDP and Federal Interest. Pasted every graph separately in "All Graph" tab also

Question 6: Apply OLS regression with money supply measures and inflation (use money supply measures as explanatory variables). Comment on the relationship that you find. Is it as expected?

Prepared in Sheets - "CPI Regression" and "PPI Regression"

Attachment:- Regression Analysis.rar

Reference no: EM132927094

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