Essay
Your textbook presents as an example of a distributed lag regression the effect of the weather on the price of orange juice. The authors mention U.S. income and Australian exports, oil prices and inflation, monetary policy and inflation, and the Phillips curve as other candidates for distributed lag regression. Briefly discuss whether or not the exogeneity assumption is likely to hold in each of these cases. Explain why it is so hard to come up with good examples of distributed lag regressions in economics.
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There is some degree of simultaneity bet...View Answer
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