a. Present the OLS SRF estimates.

b. Use the Ljung-Box test to check for an autocorrelation problem up to the 3rd-order. Include in

your answer the test equation, the null and alternative hypothesis, and your conclusion.

c. Use the White test to check for a heteroscedasticity problem. Include in your answer the test

equation, the null and alternative hypothesis, and your conclusion.

d. Use the cusum of squares test to check for parameter stability? Include in your answer the null

and alternative hypothesis and your conclusion.

e. Do you suspect a high multicollinearity problem? Explain by presenting your results

f. Is the normality assumption empirically valid? Include in your answer the null and

alternative hypothesis and your conclusion.

g. Is the interest rate function a dynamic model? Include in your answer the null and alternative

hypothesis and your conclusion.

h. Is the interest rate function dynamically stable? Include in your answer the null and alternative

hypothesis and your conclusion

i. Test the null hypothesis that (all else remaining equal), inflation expectations do not explain

the behavior of the interest rate. Include in your answer the null and alternative hypothesis and your conclusion.

j. Find and interpret the short- and long-run effects of a change in inflation expectations on the

interest rate. Draw the pattern of the effects over quarters.

k. Interpret the coefficient estimate on F-1 (the lagged dependent variable).

1. Are you satisfied with the estimates of the dynamic model? Explain clearly.