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inflation), the interest rate (rt, stored as intrate), unemployment rate (m, stored as unemp), and natural rate of unemployment (m², stored as nairu) from 1954Q3 to 2014Q4. You will need to construct the output gap variable yt from the NAIRU and unemploymentrate data as we did in class, with yt =2.3 (m; — т). a) Estimate: \tau_{t}=\beta_{0}+\beta_{1} \pi_{t}+\beta_{2} y_{t}+u_{t} Interpret the estimated coefficients and the R². b) Construct 95% confidence intervals for B1 and B2.

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