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You have to test the hypothesis that slope of the following equation (Skunk’s law or Skunk’s regularity) has a non-zero slope 0 for the country given to your OCW group by your tutor: 2. Part 2. You need to do trend forecast for your OCW country’s GAP for the next 2 years (2014-2015), using time (t) as independent variable and GAP (Y) as dependent variable: a. Calculate coefficients of b. Continue and calculate Y trend values for 2014 and 2015.

Detailed description of the task The following is the detailed description of the procedure of writing up yourOCW, with mark allocation for the parts of the OCW provided below: part l. Part 1. Skunk’s law. You need to test the hypothesis that slope is not equal to zero (HI: ) with respect to Skunk’s law: Where: Output gap, or difference between actual and potential GAP for given year, where: : Actual GAP for t-the year : Potential Gifford t-the year, calculated of actual GAP (Yet) using Haddock- Prescott Filter (using excel add-ins or other statistical programs). Intercept Slope Difference between actual (u) and natural rate Of unemployment level () (also called Cyclical unemployment), where: : Actual unemployment for t-the ear .Natural rate of unemployment t-the year, calculated using Haddock- Prescott filter (using excel add-ins or other statistical programs) : Error term of the model for t-the year Detailed description of steps for Part 1: 1. Collect the data from MIFF website. Choose and download the following data for the period of 1980-2013 for the country given to your OCW group by your tutor: a.

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Output gap in percent Of potential GAP b. Unemployment 2. Calculate cyclical unemployment, or from the information on UT: a. Download HP filter excel add-in (e. G.

You can download it here). This add-in ill help you to calculate .

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