Inflation Targeting

[diederikvanduuren]

Hi,

For a economical class I'm following I need some help for an assignment. I'm totally lost.
The assignment asks me to test if there is a difference in 1.average inflation rate and 2.variability of inflation rate.
I have a spreadsheet with the Consumer Price Indexes (quarterly data from 1985 to 2008) of 22 countries. Some of these countries introduced inflation targeting at a certain given year. By using the price indexes of the current year and previous year I already created a worksheet with all the inflations percentages. Who can help me with the next step how to test 1 and 2, I believe its possible with Excell (regressions, tables, graphs?) or do I need another program (like Eviews)?

Thanks in Advance!

[xprimexinverse]

Hi diederikvanduuren,

If this is for a class exercise, why not ask your professor? He/she should be in a better position to guide you on your econometric software needs given your level of study, course content, and requirements.

If you do need to use econometric software, EViews 9 can be recommended, indeed! It's brilliant.

I'd imagine that your assignment could be done in EViews, in Excel, or, say, using a hand calculator. The most efficient (and enjoyable!) method is, however, open to debate!

Cheers,
Graeme

[diederikvanduuren]

Thanks for the response. However our professor does not want to give extra help; he wants you to answer the question in whatever way that seems appropiate for you.

''Please use the quarterly data for Consumer Price Index (all Items) from the International Monetary International Financial Statistics database in CPI_data_1985_2008_22countries_IMF_IFS.xlsx and apply any software and techniques you think appropriate to answer the question. Present and discuss the data, the methodology, your results, and conclude. Your answer should not exceed 3 pages including graphs and tables.''

[diederikvanduuren]

Im not sure which groups to use if I need to do a t-test; since i have
- Country Y before inflation targeting
- Country Y after inflation targeting
- Country X no inflation targeting used

[diederikvanduuren]

To be absolutely clear, In Part III you will formally test whether there is a difference in a) average inflation rate and b) variability of inflation rate in a sample of 22 advanced economies over the period 1985-2008 between group of countries who adopted inflation targeting and the countries who did not.

This is what the teacher just posted. How do i test this? anova? which data?

[trubador]

This is a very nice exercise. I understand that you are expected to use your knowledge from Statistics and/or Econometrics classes. You may want to revisit Hypothesis Testing, if you are having trouble to decide what method(s) to implement. You can either use Excel or EViews. As for the latter, I can give you the following hints:

http://www.eviews.com/help/helpintro.ht ... 10.html%23
http://www.eviews.com/help/helpintro.ht ... l#ww132090