Real Consumer Expenditure and Real Disposable Personal Income Research Paper

authoritative Consumer Expenditure and Real Disposable in-person Income - Research Paper ExampleThis is evidenced by the R2 mensurate of 0.9968 for the exponential fit as compared to the R2 foster of 0.943 for a linear fit (not shown here). From a span of unaccompanied 60 years, consumption expenditure increased eightfold. The trend only serves as further evidence of the consumer icon attributed to Ameri sens society.To determine volatility we graph the rate of kind of the data set. For a time-series data, the process would call for subtracting the value for the former(prenominal) year from the value of the current year then dividing by the value of the former year. The resulting value is then multiplied by 100% to convert it into percentages. While the graph in exercise 1 shows that the values are essentially increasing, Figure 2 would indicate a very mercurial set of values.The graph shows that the rate of change fluctuates almost in a sinusoidal manner all the same it can be seen that the points are mostly placed higher than the x-axis indicating imperious rate of change. What is observable is that the outcome seems to have a 10-year period which begins to rise at the base decade year, climbs up to maximum value in the middle period (5s) then decrease again. The highest positive change was registered in the 3rd rump of 1950 with a value of 5.146% and the highest negative change in the following quarter with -2.945%. other time-series data which was acq... Another time-series data which was acquired from the same agencys website was the Personal Income and its Disposition also starting from the 1947 (1). Only the replete(p) Disposable Personal Income found in Row 35 was. The same methodology was used for the analysis. From the graph of Figure 3, we can see that the data set is also increasing. Employing the methods of best fit curve resulted to the exponential fitting as the choice because of the high R2 value. However, we can see that the rec ent values fall short of the expected behavior. Fig. 3 Graph of Real Disposable Personal Income (1947 - 2007 Quarterly)The rate of change, as can be seen from Figure 4, shows virtually semblance of sinusoidal behavior although the cycle can not be easily defined. This implies high volatility. As with the same method we used in the first data set, we see that there was generally positive rate of change with negative rates of change occurring in between decades. The highest positive rate of change occurred in the First Quarter of 1950 corresponding to the highest rate of change in the first data go the highest negative rate of change occurred in the Second Quarter of 1947.Fig. 4 Percentage Change of the Total Disposable Personal Income (1947 - 2007)Consumption Models1. Model (1) Levels (long-run) with the equationlnCt = a + blnYt which has the same form as y=mx+bWhere Ct = is the Real Consumer Expenditure or yYt = is the Disposable Personal Income or xThe basic question that this mo deling exercise would like to answer is to determine whether there is a relationship between Expenditure and Income. Our idea is that as income increases so does expenditure. For time-series data set, there is a choose to find the natural logarithms of