1. Estimating The Exchange Rate of the Canadian Dollar
Estimation Results OLS was used to find the overall best fitting for the sample period of 1970:1-2000:4, and the estimation results are follows: Yt= 0.00392 v/s 0.64184X1 v/s 0.23442X2 (2.20) (-13.22) (-6.32) where the t-statistics appear below the corresponding estimates. ... If the model has several explanatory variables we may want to graph these against each of the variables. ... Heteroscedasticity is discovered by graphing residuals against both variables, the inflation differential and the growth differential. ...
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