Suppose you include seasonality controls in your model of U.S.Personal Consumption Expenditures (billions)on U.S.Personal Income (billions)using quarterly data for the period 1969Q1-2013Q3 and you get $\begin{array} { c } \text { Consumption } _ { t } =& - 143.783 +& 0.822 \text { Income } _ { t } - & 1.782 Q 2 _ { t } + & 11.431 Q 3 _ { t } -& 0.073 Q 4 _ { t } \\& ( 15.775 ) & ( 0.002 )& ( 18.098 ) & ( 18.099 ) & ( 18.200 ) \\& & { n } = 179 \\& & R ^ { 2 } = .9994\end{array}$
A)Explain how you would create Q2_t,Q3_t,and Q4_t.
B)Interpret the coefficients on Q2_t,Q3_t,and Q4_t and comment on their statistical significance.

Question

Suppose you include seasonality controls in your model of U.S.Personal Consumption Expenditures (billions)on U.S.Personal Income (billions)using quarterly data for the period 1969Q1-2013Q3 and you get

\begin{array} { c } \text { Consumption } _ { t } =& - 143.783 +& 0.822 \text { Income } _ { t } - & 1.782 Q 2 _ { t } + & 11.431 Q 3 _ { t } -& 0.073 Q 4 _ { t } \\& ( 15.775 ) & ( 0.002 )& ( 18.098 ) & ( 18.099 ) & ( 18.200 ) \\& & { n } = 179 \\& & R ^ { 2 } = .9994\end{array}

A)Explain how you would create Q2_t,Q3_t,and Q4_t.
B)Interpret the coefficients on Q2_t,Q3_t,and Q4_t and comment on their statistical significance.

Quizplus · Accepted Answer

The Answer of Suppose you include seasonality controls in your model of U.S.Personal Consumption Expenditures (billions)on U.S.Personal Income (billions)using quarterly data for the period 1969Q1-2013Q3 and you get $$\begin{array} { c } \text { Consumption } _ { t } =& - 143.783 +& 0.822 \text { Income } _ { t } - & 1.782 Q 2 _ { t } + & 11.431 Q 3 _ { t } -& 0.073 Q 4 _ { t } \ & ( 15.775 ) & ( 0.002 )& ( 18.098 ) & ( 18.099 ) & ( 18.200 ) \ & & { n } = 179 \ & & R ^ { 2 } = .9994 \end{array}$$ A)Explain how you would create Q2_t,Q3_t,and Q4_t. B)Interpret the coefficients on Q2_t,Q3_t,and Q4_t and comment on their statistical significance.

Suppose You Include Seasonality Controls in Your Model of U