Use KStat to perform a regression of wage growth vs. unemployment in Germany (DE

Question

Use KStat to perform a regression of wage growth vs. unemployment in Germany (DE).

a. Write an estimated regression equations.

b. How does a one percentage point increase in unemployment  relate to the growth rate of wages in each country?

c. Provide a 95% confidence interval for the coefficient multiploying unemployment for each country.

d. Predict the growth rate in wages for each country in a year that has 3% unemployment.

e. Provide a 90%confidence interval for each prediction from part d.

Please answer showing any excel formulas used.

Data:

Year BE Wage Growth DK Wage Growth DE Wage Growth EL Wage Growth ES Wage Growth FR Wage Growth IE Wage Growth IT Wage Growth LU Wage Growth NL Wage Growth BE Unempl Rate DK Unempl Rate DE Unempl Rate EL Unempl Rate ES Unempl Rate FR Unempl Rate IE Unempl Rate 1961 3.3 12.9 10.2 4.6 12.9 10.6 8.3 8.2 2.9 7.4 1.9 1.2 0.7 5.4 1.2 1.4 5.3 1962 7.4 11.1 9.1 6.6 15.2 11.6 8.5 13.4 4.8 6.8 1.8 1.2 0.6 4.8 0.3 1.6 5.2 1963 8.1 4.6 6.1 7.7 21.1 11.4 5.2 19.7 8 9.3 1.6 1.6 0.7 4.8 0.6 1.6 5.4 1964 9.9 10.7 8.2 13.3 13.7 9.2 13.7 11.6 13.3 16.5 1.4 1.2 0.5 4.6 1.3 1.2 5.2 1965 9.6 13.8 9.5 12.2 15.6 6.5 5.3 8.2 4.2 11.7 1.6 0.9 0.4 4.8 1 1.5 5 1966 8.8 10.2 7.6 12.6 18.1 6 8.5 8 5 11.1 1.7 1.1 0.5 5 0.5 1.6 5.1 1967 7.5 11.1 3.3 9.5 14.7 7 8 8.3 2.8 9.3 2.4 1 1.4 5.4 1.2 2.1 5.5 1968 6.4 10.1 6.7 9.8 8.8 11.9 10.6 7.6 5.9 8.6 2.8 1 1 5.6 1.1 2.6 5.8 1969 8.5 11.3 9.5 9.6 11.8 10.9 13.9 7.6 5.6 13.2 2.2 0.9 0.6 5.2 0.5 2.3 5.5 1970 9.3 11.3 16 8.8 9.4 10.4 16.8 15.3 15.1 12.6 1.8 0.6 0.5 4.2 0.5 2.4 6.3 1971 12.2 12 11.4 8 13.6 11.3 14.8 13.7 7.8 13.9 1.7 0.9 0.6 3.1 1.2 2.7 6 1972 14.2 8.6 9.6 12.6 17.7 10.1 15.8 10.6 9.7 12.9 2.2 0.8 0.8 2.1 0.6 2.8 6.7 1973 13.5 13.6 11.9 17.2 18.3 12.4 18.8 17.5 11.4 15.6 2.2 0.7 0.8 2 0.2 2.7 6.2 1974 18 18.8 11.4 19.3 21.3 17.8 18 22.9 22.9 15.8 2.3 2.8 1.8 2.1 0.6 2.8 5.8 1975 16.5 14.4 7 20.3 22.5 18.7 28.9 21 12.4 13.6 4.2 3.9 3.3 2.3 1.9 4 7.9 1976 15.8 12 7.7 23.2 23.4 14.8 19.6 21.1 11.1 11 5.5 5.1 3.3 1.9 2.2 4.4 9.8 1977 9.1 10.1 6.6 22 26.8 12.2 14.9 20.6 9.9 8.5 6.3 5.9 3.2 1.7 2.5 4.9 9.7 1978 7.2 9.7 5.5 23.1 24.8 12.4 15.5 16.4 5.9 7 6.8 6.6 3.1 1.8 4.2 5.1 9 1979 5.8 10.1 5.8 22.1 19 12.8 18.9 19.8 6.7 5.6 7 4.6 2.7 1.9 5.8 5.8 7.8 1980 10.6 10.6 6.8 15.7 17.3 15.5 21.1 21.7 9.2 5.4 7.4 4.9 2.7 2.7 8.5 6.2 8 1981 7 9.7 4.8 21.3 15.6 14 18.1 22.5 8.3 3.4 9.4 7.9 3.9 4 11.2 7.3 10.8 1982 7.3 12.2 4.2 27.5 13.8 14.3 14.2 16.1 6.9 5.9 11 8.4 5.6 5.8 13 7.9 12.5 1983 6.3 8.7 3.6 21.6 13.9 10.2 12.8 15.8 6.9 3.1 10.7 8.4 6.9 7.1 14.1 7.9 13.9 1984 7.3 6.2 3.4 20.8 10.4 7.5 10.7 11.7 7.1 0.3 10.8 7.9 7.1 7.2 16.5 9.4 15.5 1985 4.7 5.4 2.9 21 9.2 6.7 9.2 10 4.3 1.3 10.1 6.7 7.2 7 17.7 9.8 16.8 1986 3.6 5 3.6 12 9.5 4.5 5.1 7.5 5.1 2.1 10 5 6.6 6.6 17.3 9.9 16.8 1987 2.2 8.5 3.2 11.3 7.1 3.3 5.1 7.9 3.8 1.4 9.8 5 6.4 6.7 16.8 10.1 16.6 1988 2.4 5.6 3 20.1 7.5 4.5 7 8.2 3.6 1.1 8.8 5.7 6.3 6.8 15.9 9.6 16.2 1989 6.1 4.2 2.9 23.2 7.4 4 6.5 8.6 8.5 0.7 7.4 6.8 5.6 6.7 13.9 9.1 14.7 1990 7 4 4.7 17.9 10.1 4.4 4.2 10.4 4.7 3.3 6.6 7.2 4.8 6.4 13.1 8.6 13.4 1991 7.7 3.9 5.9 15.3 10.1 3.9 4.3 8.8 5.4 4.9 6.4 7.9 4.2 7.1 13.2 9.1 14.7 1992 5.7 4.1 10.5 11.5 11.3 4.1 7 5.8 6.5 4.8 7.1 8.6 6.4 7.9 14.9 10 15.4 1993 4.7 2.3 4.1 9.8 7.4 2.9 6.4 4.6 5.7 3.5 8.6 9.6 7.7 8.6 18.6 11.3 15.6 1994 4.4 1.5 3 10.9 3.7 1.7 2.5 3 3.9 3 9.8 7.7 8.2 8.9 19.8 11.8 14.3 1995 2.1 3.1 3.6 13 3.7 2.8 2.4 4.2 1.3 1.5 9.7 6.7 8 9.2 18.8 11.3 12.3 1996 1.4 3.6 1.3 8.8 4.5 2.5 3.5 6.1 1.9 1.3 9.5 6.3 8.7 9.6 18.1 11.9 11.7 1997 3 3.5 0.8 13.7 2.3 2.2 4.2 4 2.5 2.1 9.2 5.2 9.7 9.8 17 11.8 9.9 1998 1.7 3.4 1 5.3 2.7 1.9 4.7 -1.5 1.6 3.5 9.3 4.9 9.1 10.9 15.2 11.4 7.5 1999 3.3 3.7 1.2 4.7 2.7 2.5 5.2 2.6 3.4 3.7 8.6 4.8 8.4 11.8 12.8 10.7 5.6 2000 2.5 3.6 2 6 3.7 2.1 8.9 3.1 4.7 4.6 6.9 4.4 7.8 11 11.3 9.3 4.3 2001 3.6 5.2 1.7 6 4.1 2.6 9.2 3 4.4 5 6.7 4.3 7.7 10.4 10.6 8.5 3.9 2002 4.1 3.5 1.6 6.7 4 2.9 6.5 2.4 3 5.5 7.3 4.5 8.2 9.9 11.4 8.7 4.4 and labour market Wage costs Unemployment rate; total Nominal compensation per employee; total economy States: definition EUROSTAT (National currency; annual percentage change) _________________________________________________________________________________________________

Explanation / Answer

a) for germany

wage growth = 9.8781 -0.9362*Unemployment rate

b)

Germany: wage growth = 9.8781 -0.9362*Unemployment rate

1 percent change increase in unemployment rate will lead to decrease in growth rate by 0.93

BE: wage growth = 11.6489 -0.7329*Unemployment rate

1 percent change increase in unemployment rate will lead to decrease in growth rate by 0.73

DK: wage growth = 11.802 -0.827*Unemployment rate

1 percent change increase in unemployment rate will lead to decrease in growth rate by 0.827

EL: wage growth = 20.351 -1.069*Unemployment rate

1 percent change increase in unemployment rate will lead to decrease in growth rate by 1.069

ES: wage growth = 17.8257-0.6483*Unemployment rate

1 percent change increase in unemployment rate will lead to decrease in growth rate by 0.648

FR: wage growth = 13.9113 -0.8916*Unemployment rate

1 percent change increase in unemployment rate will lead to decrease in growth rate by 0.89

IE: wage growth = 14.5139 -0.4191*Unemployment rate

1 percent change increase in unemployment rate will lead to decrease in growth rate by 0.42

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