## [answered] b. The accompanying table gives changes in the United State

b. The accompanying table gives changes in the United States aggregate unemployment rate for the period l999:I-2000:I and levels of the current and lagged unemployment rates for l999:I. Fill in the blanks for the missing unemployment rate levels. Changes in Unemployment Rates in the United States: 1St Quarter 1999 to 1St Quarter 2000 Quarter U.S. Unemployment First Lag Change in Rate Unemployment Rate 199911 4.3 4.4 -0.1 1999:II 0.0 1999:III -0.1 1999:IV -0.1 2000:I -0.1 c. You decide to estimate an AR(1) in the change in the United States unemployment rate to forecast the aggregate unemployment rate. The result is as follows: AUmt?eUS, = -0.003 + 0.621 A Urate US? , R2 = 0.393, SER = 0.255 (0.022) (0.106) The AR(1) coefficient for the change in the in?ation rate was 0.211 and the regression R2 was 0.04. What does the difference in the results suggest here? d. The textbook used the change in the log of the price level to approximate the in?ation rate, and then predicted the change in the in?ation rate. Why aren?t logarithms used here?
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