The Bijou Theater in Hermosa Beach, California, shows vintage movies. Customers arrive at the theater line at the rate of 100 per hour. The ticket seller averages 30 seconds per….
How would you interpret intercept coefficient?
From the annual observations from 1980 to 1994, the following regression results were obtained, where Y = exchange rate of the German mark to the U.S. dollar (GM/$) and X = ratio of the U.S. consumer price index
to the German consumer price index; that is, X represents the relative prices in the two countries:
Yt= 6.682 – 4.318Xt R2 = 0.528
se= (1.22) (1.333)
(ii) Interpret this regression. How would you interpret intercept coefficient?
(iii) Does the negative value of Xt make economic sense?
(iv) Suppose we were to redefine X as the ratio of German CPI to the U.S. CPI. Would that change the sign of X? And why?