Estimate the expected inflation rate for the united states

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The table below displays the real crude oil price per barrel, nominal interest rate, real interest rate, and real GDP growth rate in the United States from 2011 to 2020.  The inflation data were collected from InflationData.com ,and other data were collected from the World Development Indicators.

Year

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Real Crude oil price ($)

108.80

105.90

110.02

101.61

49.64

42.52

50.42

64.67

54.99

35.00

Nominal interest rate (%)

3.25

3.25

3.25

3.25

3.26

3.51

4.10

4.90

5.28

3.54

Real interest rate (%)

1.14

1.31

1.47

1.37

2.29

2.44

2.18

2.44

3.44

2.35

Real GDP growth rate (%)

1.55

2.25

1.84

2.53

3.08

1.71

2.33

3.00

2.16

-3.64

(b) Estimate the expected inflation rate for the United States from 2011 to 2020 and show your answer in the following table.

Year                                

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Expected inflation rate (%)

 

 

 

 

 

 

 

 

 

 

(c) Divide the sample into two groups based on the average real crude oil price and compute the average expected inflation rate in these two groups. Show your answer in the following table and state the observed relationship between real crude oil price and expected inflation rate in one sentence.

Group

Low real crude oil price (real crude oil price ≤ average)

High real crude oil price (real crude oil price > average)

Average expected inflation rate (%)

 

 

Reference no: EM133132249

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