Dependent Variable: I

Method: Least Squares

Date: 11/02/10 Time: 17:38
Sample: 1985 2009
Included observations: 25
Variable Coefficient Std. Error t-Statistic Prob.
C -1.428093 0.409804 -3.484816 0.0020
R 0.029649 0.101780 0.291301 0.7734
R-squared 0.003676 Mean dependent var -1.429600
Adjusted R-squared -0.039643 S.D. dependent var 2.009416
S.E. of regression 2.048858 Akaike info criterion 4.349061
Sum squared resid 96.54987 Schwarz criterion 4.446571
Log likelihood -52.36326 F-statistic 0.084856
Durbin-Watson stat 1.983435 Prob(F-statistic) 0.773432

Correlation between inflation rate differential and interest rate differential

Inflation dependent

15.000

10.000

5.000

rd-rf
0.000
πd-πf
1 3 5 7 9 11 13 15 17 19 21 23 25
-5.000

-10.000

-15.000
Correlation Real Exchange Rate and Inflation Rate Differential

Dependent Variable: RE
Method: Least Squares
Date: 11/02/10 Time: 17:48
Sample: 1985 2009
Included observations: 25
Variable Coefficient Std. Error t-Statistic Prob.
C 2.823327 0.076429 36.94042 0.0000
I -0.040146 0.031412 -1.278042 0.2140
R-squared 0.066308 Mean dependent var 2.880720
Adjusted R-squared 0.025713 S.D. dependent var 0.313278
S.E. of regression 0.309225 Akaike info criterion 0.567121
Sum squared resid 2.199256 Schwarz criterion 0.664631
Log likelihood -5.089007 F-statistic 1.633391
Durbin-Watson stat 1.145079 Prob(F-statistic) 0.213983

10

πd-πf
4
RER

0
1 2 3 4 5 6 7 8 9 10111213141516171819202122232425

-2

Correlation Real Exchange Rate and Interest Rate Differential

Dependent Variable: RE
Method: Least Squares
Date: 11/02/10 Time: 17:51
Sample: 1985 2009
Included observations: 25
Variable Coefficient Std. Error t-Statistic Prob.
C 2.880863 0.063965 45.03843 0.0000
R 0.002821 0.015886 0.177555 0.8606
R-squared 0.001369 Mean dependent var 2.880720
Adjusted R-squared -0.042050 S.D. dependent var 0.313278
S.E. of regression 0.319797 Akaike info criterion 0.634359
Sum squared resid 2.352217 Schwarz criterion 0.731870
Log likelihood -5.929493 F-statistic 0.031526
Durbin-Watson stat 0.882592 Prob(F-statistic) 0.860627

12

10

4 rd-rf
2 RER

0
1 2 3 4 5 6 7 8 9 10111213141516171819202122232425
-2

-4

-6