Data Task 2: Describing a Level Using an Exponential Model
2.1
Plot the real GDP time series for 1948 to 2006
2.2
Using Excel, estimate an exponential model for real GDP using the 1948-2006 data. Start with a
fourth order model, and reduce the model to a third order model if the fourth order variable is “not
significant.” Reduce the model still further if the third order variable is not significant. Stop
reducing the model when the highest order time is significant. Report your regression in a
professional manner.
2.3
Convert the USDATA.xlsx dataset into a STATA dataset. Create a STATA “startup” do-file that
will create the variables you need to run the regressions in 2.2. Then, create a “levelsreg” do- file
that will run the regressions necessary to estimate the exponential levels model of question 2.2. Run
your levelsreg do-file and confirm that you get the same results in STATA that you obtained in
Excel. Comment on the advantages and disadvantages of using STATA compared to Excel.
2.4
Use the model you obtained in the previous question to estimate the real GDP level for the year
2016. Write down your estimate as the answer to this question.
2.5
Plot the actual real GDP time series along with the estimated model so that the model also shows
the forecast.