Introductory Econometrics 4th Edition by Jeffrey Wooldridge

Exercise 15

Using the monthly data in VOLAT.RAW, the following model was estimated:
where pcip is the percentage change in monthly industrial production, at an annualized rate, andpcsp is the percentage change in the Standard Poor's 500 Index, also at an annualized rate.
(i) If the past three months of pcip are zero and pcsp-1 = 0, what is the predicted growth in industrial production for this month Is it statistically different from zero
(ii) If the past three months of pcip are zero but pcsp -1 = 10, what is the predicted growth in industrial production
(iii) What do you conclude about the effects of the stock market on real economic activity