From the annual observations on relationship between nominal exchange rate and relative prices from 2002 to 2018, the fo
Posted: Sun Jul 03, 2022 6:51 am
From the annual observations on relationship between nominalexchange rate and relative prices from 2002 to 2018, the followingregression results were obtained, where Y = exchange rate of theNigerian Naira to the American Dollar (N/$) and X = ratio of theU.S. consumer price index to the Nigerian consumer price index;that is, X represents the relative prices in the two countries: =8.68 − 7.38Xt R 2 = 0.848 SE = (4.22) (1.84) (a) Interpret theseresults and explain the significance of the estimated parameters.(b) Does the negative value of Xt make economic sense? (c) What arethe differences between econometric model and economic model?