Estimate okun law using data from the federal reserve

Reference no: EM13778165

8. The goal of this exercise is to estimate Okun's law using data from the Federal Reserve. Download the following time-series from FRED:1 • The civilian unemployment rate (UNRATENSA): U. • The natural rate of unemployment (NROU): UN . • Real gross domestic product (GDPC1): Y . • Real potential gross domestic product (GDPPOT): Y P . (a) From these time series calculate and plot the unemployment gap, U - UN , and the output gap 100 × (Y - Y P )/Y P as a function of time (and on a quarterly basis) from the first quarter of 1949 to the end of 2014. (b) Create a scatter plot of the unemployment gap as a function of the output gap. Your graph should look similar to the graph on slide 27 of lecture 8. (c) Perform a linear regression on the data in the graph you generated for Question (8b) and show the regression result as a line on your graph. (Note: The regression method you used in the analysis of the Cobb-Douglas data can be used here.) (d) Does your regression analysis support the equation for Okun's Law discussed in class? Why?

Reference no: EM13778165

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Estimate okun law using data from the federal reserve : 8. The goal of this exercise is to estimate Okun's law using data from the Federal Reserve. Download the following time-series from FRED:1 • The civilian unemployment rate (UNRATENSA): U. • The natural rate of unemployment (NROU): UN . • Real gross d..

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