i ned to know wether this can be done the right way yes or no. had bad experiance with the last 2 assignments with you guys

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(ECO3/4ATE)

ASSIGNMENT 3

SPECIAL NOTES

i) This assignment contributes 35% to the total mark of this subject.
ii) Due date: Friday 15 June 2012.
iii) Write your report with a word processor. Present your paper on A4 paper, in
one-sided format. Staple the sheets in the top left corner. You can hand in your
paper in a plastic pocket, but no fancy binding, folder or plastic envelope,
iv) All calculations have to be performed with EViews. Relevant EViews computer
printouts must be inserted or attached to the paper. Key statistics in the
printout should be highlighted. Notes may be neatly hand written onto the
computer printout.
v) Do not hand in your diskette or memory stick with your assignment. Later,
however, you might be asked to present it in order to verify some details.
vi) You are encouraged to discuss the case study with your fellow students. The
final submission, however, must be your own work.

The data required for this assignment are saved in the cs3e1.xls Excel file. You can

This assignment requires undertaking the following tasks:

Q1. (10 marks)

The cs3e1 file contains annual Greek data from 1960 to 1995 on the following variables:

PriCon: private consumption at constant market prices of year 1970 (million drachmas);
PerDisInc: personal disposable income at constant market prices of year 1970 (million
drachmas);
CPI: consumer price index (1970 = 1).

a) Import this data set to EViews. Compute the inflation rate (Inf) as the first difference
of the logarithm of CPI. Plot the levels and first differences of PriCon, PerDisInc and
Inf, and briefly comment on the graphs.

b) Perform various unit root tests on PriCon, PerDisInc and Inf. What do you conclude?

1Q2. (10 marks)

a) Perform the Engle-Granger test for cointegration on PriCon and PerDisInc. What do…

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