Problem: Analyze the real Gross National Product "realgnp" over the interval 1909-1988. The data is attached.

Particularly, compare the following models:

realgnp = α + β × year + ε
realgnp = γ + δ × indprod + ǫ

where "indprod" represents the Industrial Production Index.

1. Provide a single graph which reports "realgnp", "indprod" and "year".
   

• Intuitively, which model will be the best?

2. Some data are missing: Provide two graphs which reports the predictions for the missing data from both models. If you can, try to find out a clever way to combine the 2 graphs.

• Which model would you choose? Why?

3. Provide 95% confidence intervals for the mean and the data in both models: one graph for each model.
• Which model is characterized by a higher degree of uncertainty?

4. Provide two graphs which report the residuals from both models.
• Do you think that the OLS assumptions hold?

Price: $12.08

Solution: The downloadable solution consists of 8 pages, 408 words and 4 charts.
Deliverable: Word Document