Problems

18.10. Table 18.2 gives you data on Y (gross domestic product), I (gross private domestic investment), and C (personal consumption expenditure) for the United States for the period 1970-1999. All data are in 1996 billions of dollars. Assume that C is linearly related to Y as in the simple Keynesian model of income determination of Example 18.2. Obtain OLS estimates of the parameters of the consumption function. Save the results for another look at the same data using the methods developed in Chapter 20.

"A Quarterly Econometric Model of the United States,'' Journal of American Statistical Association, vol. 56, 1961, pp. 379-383.

734 PART FOUR: SIMULTANEOUS-EQUATION MODELS

TABLE 18.2 PERSONAL CONSUMPTION EXPENDITURE, GROSS PRIVATE DOMESTIC INVESTMENT, AND GDP, UNITED STATES, 1970-1999 (Billions of 1996 Dollars)

Observation

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