We Are Trying To Estimate The Relationship Between The Percentage Change Of Hous
(i) Write out the estimated equation and the adaptive expectation process.
(ii) Which one is the best model among the three and Why?
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6. We are trying to estimate the relationship between the percentage change of housing price andexpected interest ratesAln(Housing Pricet ) = a + Btbillt + utexpectations.using three methods including lagged interest rates, rational expectations, and adaptiveMethod #1: Lagged interest rateAln(Housing Pricet ) = a + Btbillt-1 + utgen lagged_tbill=tbill[_n-1](1 missing value generated)reg house_price_pc lagged_tbillSourceSSdfMSNumber of obs150ModelF (1, 148)0. 981 . 6882984611 . 68829846Prob > FResidual255 . 1210250. 3240148 1. 72379071R-squared0. 0066Adj R-squared=-0. 0001Total256. 809324149 1. 72355251Root MSE1 . 3129house_pric~cCoef.Std. Err.tP> Itl[95% Conf. Interval]lagged_tbill-. 0241792. 024432-0. 990. 324-. 07245988251442. 1692795. 0241015cons4.870. 00049062711 . 159661
