Discuss the given regression equation

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Reference no: EM131530041

Question: A study on unemployment in the British interwar period produced the following regression equation

Sample period 1920-1938 (n = 19).

U = unemployment rate

B/W = ratio of unemployment benefits to average wage

Q = actual output

Q* = trend predicted output

log Q - log Q* = captures unexpected changes in aggregate demand

The authors23 conclude that the high benefit levels are partly responsible for the high rates of unemployment. Critics of this study argued that when the single observation for 1920 is dropped the results change dramatically." The equation now is

Sample period 1921-1938 (n = 18).

Test whether the results are significantly different from each other.

Reference no: EM131530041

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