I just wantta know how to calculat the delay multipliers, interim multipliers and total multiplier because I overslept and missed the lecture.
Homework 3 Consider the following distributed lag model relating the percentage growth inprivate investment ([NVGWTH) to the federal funds rate of interest (F FRATE): INVGWTH, = 4 — 0.4FFRATE, — 0.8FFMTE,_1 — 0.6FFRATE,_2—- 0.2FFRATE,_3 (a) Suppose FFRATE = 1% for r = I, 2. 3, 4. Use the above equation to forecastINVGWTH for r = 4. (b) Suppose FFRATE is raised to 1.5% in period t = 5 and then returned to itsoriginal level of 1% for: = 6. 7, 8. 9. Use the equation to forecast INVGWTH forperiods I = 5, 6, 7. 8, 9. Relate the changes in your forecasts to the values of thecoefficients. What are the delay multipliers? (c) Suppose FFMTE is raised to 1.5% for periods I = 5. 6. 7, 8, 9. Use the equationto forecast INVGWTH for periods I = 5, 6, 7, 8, 9. Relate the changes in your forecasts to the values of the coefficients. What are the interim multipliers? Whatis the total multiplier?
