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6 -f
Mot for publication
Ihe ^Effects of the Tax Cuti/

Revised version of a paper prepared for the
System Committee on Business Analysis,
Cleveland, Ohio, April 23-24, 1964

There are, I think, four different points that must
attempting to assess the likely effects of the recently enacted tax cut:
(l) the amount and timing of the reductions; (2) the likely "initial" response
by consumers to the extra take-home pay; (3) the probable size of the multi­
plier that will multiply the initial response into its total effect on GNP; and
(4) the possibility of accelerator effects.
each of these questions in turn.

This paper attempts to deal with

Its most significant contribution, however,

I think is the presentation in section 2 of a statistically estimated consumption
function that is both rather simple and yet apparently quite stable and thus
perhaps reliable for forecasting purposes.
The amount and timing of the reductions.

One of the interesting aspects

of the tax bill is that no one seems to have any very precise idea as to just how
much extra income was given to consumers.

According to Treasury estimates, the

1964 and scheduled 1965 rate reductions together amount to a cut in personal
tax liabilities of $9*5 billion, $400 million of which is offset by revenue
reform measures.

The net cut of $9*1 billion is a shade less than 2 per cent

of the 1963 fourth quarter personal income figure that was used as a base for
the calculation.

In terms of 1964 or 1965 income levels, the cut is, of course,

somewhat larger than $9«1 billion.

Indeed, my own projections imply that at

the 1965 income level the cut in tax liabilities will amount to about $10.6
billion.

The calculations presented in this paper, however, make use of the

estimates based on the lower 1963-IV income level.
A question that is even more crucial than the size of the over-all
tax cut is its allocation between calendar years 1964 and 1965.
l7

On a liability

The views expressed in this paper are not necessarily those of the
Bank of New York.

Federal Reserve



2

basis, the answer is not too difficult.

It appears that about $6.1 billion of

the total is applicable to calendar year 1964, and the additional $3*0 billion
is applicable to 1965 (see Table i).

As has been well publicized, however, the

reduction in the withholding rate to l4 per cent on March
shot the cut in tax liabilities for the current year.

19^4 somewhat over­

There is a need, therefore,

to estimate the size of the 1964 cut on a cash basis, and it is this calculation
that presents the problem.

The difficulty, of course, is that the calculation

involves some assumption as to what extent individuals will take it upon them­
selves to adjust their withholding rate so as not to be caught with the need
for making a substantial final settlement next April.

Table I
Estimated Allocation of 1964 and 1965 Tax Cuts
(Billions of dollars)
Cumulative Cut, in Full-Year Terms
Liability Basis
Cash Basis
1964

6.1

7.2

1965 first half

9.1

8.0

1965 second half

9*1

9-1

If all individuals do take steps to change their withholding rates
so as to avoid the final payment burden in 1965, then quite obviously the extra
cash available in 1964 will be the same as the cut in tax liabilities— namely
$6.1 billion.

On the other hand, to the extent that such adjustments in the

withholding rate are not made, the effect of lowering the withholding rate to
14 per cent will, according to my estimates, provide about $7.2 billion in extra
cash in consumer pockets in 1964.—/

So far as I know, there has been no broad

27
As" in the other calculations, this estimate is based on the level of
personal income in the fourth quarter of 1 9 6 3 . The Treasury1s estimate that’
the lower withholding rate freed $800 million a month apparently was based 6x
1
an assumed 1964 income level.




3
study as to what individuals are doing with their withholding rates.
of two New York City employers

A "survey"

indicated that about 10 per cent of their

employees had asked to have their withholding stepped up somewhat.

If this

"sample" is representative of the country at large, then the amount of the 196^
tax cut will in fact probably be closer to the $7.2 billion cut in withholding
than to the smaller reduction in liabilities.

The calculations presented below

are based on a $7.2 billion figure for 1964.
It should be pointed out that a tax cut of $7.2 billion on a cash
basis for 1964 implies that extra final payments next year will amount to $1.1
billion dollars.

Thus, even with the second stage cut in tax liabilities at the

start of 1965^ the net tax cut on a cash basis for the first half of next year
will amount to only $8.0 billion, rather than the full rate reduction of $9*1
billion (see Table i).

Once the final payments and refunds are out of the way,

the size of the over-all cut should move up to the total $9.1 billion annual
rate level.
The likely "initial" response by consumers.

There have been several

econometric studies attempting to estimate the lag in consumer response to changes
in income.

Each of these studies, however, seems to have some serious defect

th^t precludes its application to the question raised here.—'

For this reason

I have estimated some equations of my own, and from the fair range of alternatives
presented in the appendix have chosen what seems to be the best of the lot to
discuss in detail.

The equation., estimated from quarterly data at seasonally

^7
One such article is that by Albert Ando and E. Cary Brown, "Lags in Fiscal
Policy," which appeared in the CMC volume of study papers entitled Stabilization
Policies, pages 97-163. Unfortunately the figures for disposable income used
in this study for some reason do not agree with the total published by the
Commerce Department.




k
adjusted annual rates for the period from the first quarter of 1952 through the
fourth quarter of 1963,—^ is as follows:

Ct = 0.167 + 0 . 21+8 Yt + 0 . 33 ^ (Yt -Yt _-L) + 0.215
(0.100)
(0.126)
(0.103)
R2 = .99907

Se = 1.55

+ 0.73 3 Ct _1
(0.107)
D = 1.91
W

where C is personal consumption expenditures and Y is disposable personal income.
As is quite evident, each of the coefficients in this equation is
statistically significant at least at a 5 per cent level of confidence, the
standard error of estimate is small by most relevant comparisons, and the DurbinWatson ratio is quite good.

To be sure, even with the high Durbin-Watson ratio,

the residuals do show some cyclical pattern, with the equation exhibiting a
tendency to over-estimate consumption slightly during recession periods (see
Chart i).—^

In none of the other equations tried, however, was the Durbin-

Watson ratio any higher than in the one above, and in all other cases the
2
standard error of estimate was slightly larger and the R slightly smaller

than for this equation.
One of the significant implications of this and every other equation
that was estimated is that after a sufficient amount of time has elapsed some­
where between 93 and 9^ Per cent of any change in disposable income is spent

bj
Data from the 19^-6-51 period were not included in the regression because
of the extreme erraticness of the consumption-disposable income ratio in those
years. Only after the working off of some of the excessive liquidity that had
been stored up during World War II and the ending of the scare buying that
accompanied the start of the Koreari War did the consumption function settle
dovn to its standard textbook form. I find it difficult to believe that the
experience of those immediate postwar years can be very helpful at all in
estimating consumer behavior in the current period.
5/
Curiously, there is also a persistent tendency to overestimate consumption
in third quarters, suggesting either a shifting marginal propensity to consume
during each year, or more plausibly a difference in the seasonal adjustment
factors for income and consumption.




5
for personal consumption.

In particular, the long-run marginal propensity to

consume estimated from the above equation is 93*1 per cent.

The immediate

response is not this large, however, and the above equation implies that only
58.3 per cent of any income change will be spent in the same quarter that the
change occurs

(see Table II).

By the second quarter the response implied by the

above equation is up to 89.1 per cent and it rises gradually from that point on
until reaching the long-run level of 93-1 per cent.
Table II
Amount of Extra Consumption in Successive
following a Permanent Rise in Disposable
expressed as a percentage of the income
(figures derived from equation cited in

Quarters After the Income Change

Quarters
Income,
change
text)

Extra Consumption as a
per cent of income change

1
2
3
4
5

58.3
89.1
90.2
91.0
91.6
92.0

6
7
8

92.3
92.5

Long-run MPC

93.1

I might add a word or two more about this implied response pattern.
All of the better equations that were estimated— i.e., those with high values
2
for R and for the Durbin-Watson ratio— implied a first-quarter response of about

60 per cent of the change in income.

Thus, I think the 58.3 per cent figure cited

can be used with a fair degree of confidence.

For the second quarter, however,

the evidence is not so unanimous, with some equations implying an 80 p§r cent
response and others a response that is closer to 90 Per cent.

By the third

quarter, there is agreement once again at around a 90 per cent response rate.




6

One other question might be asked relative to the above equation— namely,
hov did it perform in the period following the 195^ tax cut?

That cut went into

effect on January 1, 195^- and amounted to $1.3 billion, or a little less than 0.5
per cent of fourth-quarter 1953 personal income.

By and large, the residuals from

the above regression equation during the 195^-55 period do not seem overly large
(see Chart i).

In the first quarter of 1954 the equation very slightly over­

estimates consumption, but after that consumption in each of the following six
quarters is somewhat underestimated.

The excess of actual consumption over the

predicted amount from 1954-11 to 1955- I H seems to be related largely to the rapid
rise in consumer credit during that period— a variable that was not included in
the regression equation.

This rise in consumer credit could, of course, have been

related directly to the effects of the tax cut, in which case the above estimates
of a response to the tax cut might be judged somewhat too conservative.

Alternatively

and I think more plausibly, however, the rise in consumer credit probably reflected
the over-all improvement in consumer sentiment as the economy emerged from the
recession, in which cp.se the estimates of the direct response to the tax cut would
not be in serious error.
In any event, for purposes here, I assume that the response implied by
the above equation is not in serious error, and thus have applied the response
rates shown in Table II to the actual 1964 and scheduled 1965 tax cuts (measured
on a cash basis) to obtain a predicted increase in consumption stemming from the
tax cuti

The responses for the successive three-month periods following the

March 5 effective date of the tax cut were allocated into calendar quarters on
a pro rata basis.

I estimate that the "initial" (or first round) response to

the tax cut in the first quarter of 1964 should have resulted in a $1.2 billion
increase in the seasonally adjusted annual rate of consumption, and that for the
current quarter the initial response should amount to $4.8 billion (see Table III).




7
The estimates for this first-round response rise somewhat further over the balance
of this year and next, and eventually reach $8.5 billion— i.e., 93*1 per cent of
the $9*1 billion tax cut.
Table III
"Initial" Consumption Response to 1964 and 1965 Tax Cuts
(Seasonally adjusted annual rates in billions of dollars)
Quarter
1964

Extra Amount of Consumption

I
II
III
IV

1.2
4.8
6.4
6.5

1

7.0
7.3

1965

II
III
IV

1964 Average = 4.8

8.0

8.4

Long-run

1965 Average =7.7

8.5

The probable size of the multiplier.

The numbers presented thus far

represent only the first-round response to the extra income provided directly by
the tax cut.

They do not take account of the multiple effects on income and

consumption that will occur once these initial round expenditures work their
way around the economy.

An estimate of the total effect on the economy requires

some assumption about the size of the multiplier.
For the purposes here, I have assumed simply that the long-run multiplier
is 2.5.

This seems to be well within the range of current opinion, and has been

confirmed in some of my own work.

For example, one very simple quarterly model

that I have estimated relating GNP to the total of GNP minus consumption expenditures
implies a multiplier for an exogenous shift in expenditures of 2.65.

I have also

examined Lawrence Klein's quarterly econometric model and found that it implies
an average multiplier of 2.68 for the full year following an exogenous expenditure
change— quite close to the estimate derived frpm the simple model.

Just for the

record, I might point out that a somewhat lower estimate of the expenditure multiplier



8

seems to be implied in the revised version of the Michigan Universtiy econometric
model that Daniel Suits presented last October in which he estimated that a $6.3
billion tax cut would produce an extra $12.0 billion rise in GUP.
By the same token that there is a lag in the attainment of the long-run
marginal propensity to consume, so too is there a lag in the attainment of the
long-run expenditure multiplier.—/

If the long-run expenditure multiplier, defined

in terms of a simnle Keynesian system as

^
.is assumed to be 2.5
1-MFC" oat of GTTP '

and the long-run marginal propensity to consume out of disposable income is .931>
then the "leakage" between GNP and disposable income must amount to about 64.4
per cent of GNP.

With this amount of "other" leakages, each of the short-run

marginal propensities to consume shown in Table II imply short-run multipliers as
shown in Table IV.
Table IV
GNP Multipliers in Successive Quarters
following an Exogenous Rise in Expenditures, based on a
long-run multiplier of 2.5 and short-run marginal propensities
to consume out of disposable income as shown in Table II
Quarters after Expenditure Increase

1
2
3
4

5
6
7
8
Long-run multiplier

of

Multiplier

1.60
2.35
2.39
2.42
2.44

2.45
2.46
2.48
2.5

In an earlier version of this paper I had rejected this point of view on
the belief that I had already taken account of all of the necessary lags in my
estimates of the initial response by consumers. I am grateful for the persistence
of several of my collegues in the System for pointing out what I should have seen
from the beginning as an obvious logical error ip my ways.




9
Applying the multipliers shown in Table IY to the initial round increases
in consumption shown in liable III gives an estimate that $2.0 billion of the rise
in GNP in the first quarter was due to the tax cut, and that the cut will add
$8.7 billion to GNP in the current quarter (see Table V).

For 1964 as a whole,

I estimate that the cut plus the multiplier will add $10.0 billion to GNP, and
that in 1965 it will add $18.3 billion.

Just for purposes of comparison, Table V

also shows the extra amount of GNP that would result if the multiplier were con­
sidered to be a constant 2 .5 .
Table V
Effect on GNP Stemming from the Tax Cut,
assuming multipliers as shown in Table IV,
and also assuming a constant multiplier of 2 .5*
(Seasonally adjusted annual rates in billions of dollars)

Quarter

1964

1965

I
II
III
IV

2.0
8.7
14.0
15.5

I
II
III
IV

Extra Amount of GNP
with Constant Multiplier

l6.6
17.6

19.0
20.1

3.1
12.1

1964
Average

=

10.0

16.1
16 .3

1964
= n#9
Average

17.6
18.3
1965
Average

21.2

Long-■run
*

Extra Amount of GNP
with Varying Multiplier

20.0

1965

20.9

Average

= iQ 2

21.2

Estimates do not include possible accelerator effects.

Possible accelerator effects.

The estimates given in Table V reflect

simply the multiplier effects of the likely increase in consumption stemming from
the tax cut.

They do not include any accelerator response on plant and equipment

spending, which of course would be further enlarged by the multiplier.

While I

fee}, sure that such accelerator effects in principle do operate, estimation of
their magnitude is certainly a highly tenuous undertaking.

Moreover, the lags

that are involved clearly would preclude any significant accelerator response



10

stemming from the actual introduction of the tax cut at least for the current
year.

It, of course, is possible— and indeed quite probable— that some of the

currently planned capital outlays in some sense represent an anticipated accelerator
response as businessmen placed their bets before enactment of the bill became a
certainty.

I do not, however, want even to guess how much of the 12.4 per cent

gain in plant and equipment spending suggested by the McGraw-Hill survey can
actually be related to the tax cut.

Thus, I leave it that even if the accelerator

does exist, the estimates for 1964 as presented in Table V probably can be taken
as a pretty fair indication of the extra amount of GNP attained this year (over
and above the amount attributable to other factors) in response to the intro­
duction of the tax cut.
I might for a moment, however, venture into the realm of the unknown
and look beyond 1964.

Some earlier work that I have done suggested that the

"ultimate" accelerator response of plant and equipment expenditures stemming from
a $1 billion cut in individual income taxes might amount to about $0.3 billion-which implies a $2.7 billion increase in capital spending stemming from the actual
1964-65 tax cut of $9.1 billion.

With a long-run multiplier of 2.5, this increase

in capital spending will raise GNP by an additional $6.8 billion, which together
with the $21.2 billion increase stemming from consumption brings the total rise
in GNP from the individual tax cut to $28.0 billion.

To go even further out on

a limb and add in a possible $11 billion increase in GNP stemming from plant and
7/
equipment expenditures induced by the corporate tax cut—' gives a total increase
in GNP of some $39 billion.

Fortunately from my point of view the accelerator

T7
This is based on some earlier work that suggests! that the ultimate multiplieraccelsrator effect on GNP'might amount to 4.6 times the size of the cut in corporate
income taxes.




11

response to the individual tax cut and the response to the corporate tax cut will
stretch out over such a long period of time that no one can ever really say whether
I am right or wrong,

From a less glib point of view, however, ;the economy is

probably also fortunate that these responses operate only with a long lag, for
otherwise there might be even more concern than there is about the prospects of
maintaining price stability.

Frederick W. Deming
Federal Reserve Bank of New York
May 7, 196^




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Appendix I
Regression Equations Estimated Using Seasonally Adjusted
Quarterly Data on Annual Rates from First Quarter of 1952
through Fourth Quarter of 1963

la.

Ct = -1.339 + .931 Yt
(.006)
151.49
R2 = .99799
L-R MPC:

lb.

Ct
i L-R MPC:

lc.

93-1

Se = 2.21
/ Quarterly MPC:

92.7

/ Quarterly MPC:

93.1

93 .1

92.7

92.7

92.7

92.7

Se = 1.72

DW - 2.17

se = 2.19

DW = .60

C+ = -1.446 + .755Y+ + .178 Y+-I
(.139)
(.141)
5.42
1.27

L-R MPC:

9^.2

/

L-R MPC:

Quarterly MPC:

75.5

9^.2

9^.2

9^.2

.827 + .100 Yt-1

^ =
Yt

(.137)1“
•73

R2 = .012

2c.

93.1

AC+ = 1.362 + .5714Y+
(.106)
5.49

R2 = .99806

2b*

93-1

-92T

R2 = .388

2a.

DW = .73

Se = .007
92.8

/

Quarterly MPC:

82.7

DW = .67
92.8

92.8

92.8

A c t = .566 + .520 A Y t + .271 AY^._1
(.101 )
(.103 )
5.13
2.63
R2 = .470




Se = 1.62

DW = 2.13

2

3a.

Ct = -1.446 + .933Yt - .l79£Yt
(.006)
(.l4l)
145.85
-1.27
R2 = .99806
L-R MPC:

3b.

Sg = 2.19

93.3

ct

/

Quarterly MPC:

74.5

DW - .60
93-3

93-3

93.3

.928 - .100 A Yt
(.137) Yt
-.73

R2

= .012

L-R MPC:

3c.

Se = .007

92.8

/

Quarterly MPC:

92.8

DW = 2.13

c = -1.451 + .933Yt - .l85£Tt +.055AYt_i
.
(.143)
-1.29

R2 = .99807
L-R MPC:

93.3

Ct
— =
Yt

/

.38

Quarterly MPC:

74.7

(.139)Yt

93.3

93-3

.69
Se = .007

92.7

R2 = .99807



98.7

(.l4o)Yt

/

Quarterly MPC:

8l.l

C+ = -1.452 + .932Y+ - .185AY+ + .051£T+
(.007)
(.145)
(.147)
136.29
1.28
.35

L-R MPC:

DW = .60

£Y+
AY+ i
.927 - .115—^ + .0Q7“ Xt-l

R2 = .022
L-R MPC:

(.144)
Se = 2.21

-.83

5a.

92.8

Se = 1.62

(.007)
141.09

^b'

92.8

AC+ = .566 + .790A Y+ - .271^Y).
(.130 )
(.103)
6.09
-2.63
R2 = .470

4a.

82.7

DW = .67

93.2

DW = .66
102.4

92.7

+ .02l|£Y+_2
(.145)
.17

se = 2.24
/ Quarterly MPC:

74.7

. 92.7

DW = .59

98.4

95.7

93.2

3

6a.

ct = .977 + l.OOlCt^ + .563£Yt
(.005)

(.111)

183.88

5.09

R2 = .99878

Se = 1.74

56.3

Quarterly MPC:

6c.

56.3

+ .200&&Y+
(.102)
1.95

Ct = .901 + .999Ct-i + .526AYt + .276Art _1
(.105)
5.00

R2 = .99894
52.6

A c + = 2.246 + .3^ . ,
(.132 )

2.6l

90.2

2.60

90.2

DW = 2.13
90.2

+ . 3 l 4 A ^ t + .279^^+.!
(.104)
(.103)

3.00

R2 = .282

2.70
DW = 2.36

Se = 1.91

Ct .901 + .999Ct_1 + .526AiT+ + .279^t-l " *023^t-2
(.005 )
(.106) t (.108 )
(.108 )
184.33
4.94
2.58
-.22
R2 = .99894

Se - 1.66

Quarterly MPC:

9a.

(.106)

Se = 1.64

Quarterly MPC:

8a.

DW = 2.17

Se = 2.04

(.005)
190.78

7c.

56.3

A C + = 2.162 + .34^ 0* ■
. ,
(.141)
2.65
R2 = .164

7a.

56.3

DW = 2.16

52.6

Ct = .852 + 1 .1330 ^ 2
.
(.122 )

9.26
R2 = .99881

Quarterly MPC:



90.5

92.8

DW = 2.14
92.8

- .132Ct _2 + .532AYt
(.123 )
(.114)
-1.07
4.65
Se = 1.74

53-2

60.3

DW = 2.39

61.3

61.5

4

9c.

Ac+ = 2.158 + . 374AC+ , + . 002 ACL o + . 200 ZiAY,
( . 148 )
( . 146 ) w
( . 104 )
2.53
.01
1.92
R = .164

10a „

se = 2.06

ct = .957 + .928^ . ! + .071Ct_2 + .573^rt + . 3 1 4 ^ ^
(.145)
( . 145 )
(.109)
(.132)
6 . 4o
.49
4.94
2.37
R2 = .99895

se = 1.65

Quarterly MPC:

10 c.

57-3

8 4 .6

8 2 .6

( . 149 )
I.3 0

R2 = .310

( . 109 )
3.28

( . 113 )
3.02
DW = 2.29

Ct = .955 + .9 3 1 C t-i + .068Ct _2 + .537AYt _ ! + . 3 1 3 ^ . ! - .005AYt - 2

(.157)
.43

(.110)

( . 135 )
2.32

4.86

R2 = .99895

( . 117 )
- . 04 -

Se = 1.67

Quarterly MPC:

53.7

8 1 .3

79-1

DW = 2.01

T9-2

Ct = -.410 + .453Yt + .5l8ct_1
(.084)
5.43

(.091)
5.73

R2 = .99884
L-R MPC:

12 b.

82 .6

Se = 1 .8 9

(.158)
5.89

12a.

DW = 2.01

<3Ct = 1.775 + .289^Ct _1 + . 194ACt _2 + .3 5 9 A A It + • 342/\yyYt _1

(.138)
2.08

11 a.

DW = 2.1 7

94.1

Ct
77 =

/

Quarterly MPC:

45.3

68.8

8l.O

87.3

, C+ i
.463 + *506

(.098)
5.18
R2 = .368

L-R MPC:



DW = 1.25

Se = 1.70

t
Se = .006

93.8

/ Quarterly MPC:

46.3

DW

69.7

8l.6

87.6

1.22

5

12c. A C t = 1.030 + ,535Zfft + - 1 3 ^ - !
( . 110)
( . 121)

4.86

1.11
s = 1.72

R2 = .405

13a.

C+ = -.593 +

. 442 Y+ + . 764 c.
(.081 )
(.146)
5.48
5.23

-1

R2 = .99894
L-R MPC:

13b.

- .236c.
(,112 )
-.210

o

Se = 1.64

93.7

/

Ct =

Quarterly MPC:

DW

78 .0

44.2

93.4

1.76

97.2

+ ,764ct-l -

5.08

-2.18

R2 = .429
L-R MPC:

DW = 2.40

e

= .006
93.2

/

Quarterly MPC:

DW = 1.73

45.2

79-8

91.9

95.6

13c. ACt = 1.026 + .535ATt + .133ACt_ L + .002dCt_2
(.128 )
1.04

(.112)
4.79
R2 = .405

l4a.

DW = 2.13

S- = 1.74

ct = -.660 + .450Yt + .738ct _1 - .156ct _2 - .062Ct _3
(.083 )
5.43

(.156 )
4.73

R2 = .99895
L-R MPC:

^

(.123 )
.02

|

93.6

.

/

Quarterly MPC:

.,60 +

R2 = .433

45.0

DW = 1.71
78.2

. tie^ S

4.61




(.120)
-.52

se = 1.65
e

(.160) t

L-R MPC:

(.191 )
-.82

(.122) t

-.52
DW = 1.67

Se = .006

93.1

/

100.6

. .061^ 3

(.194) t
-.86

95.7

Quarterly MPC:

46.0

79*9

97.2

101.4

6
15a.

Ct = -.607 + .460Y+ + .733C+ n - .176c. „ + .011C. _ - .059C+ u

(.085)

(.157)

5.39

4.65

R2 = .99896
L-R MPC:

16a.

(.196)
-.90

(.177)
.06

3 (.104)
-.57
DW = 1.69

S = 1.66
e

93.5

/

Quarterly MPC:

46.0

79-7

96.3

103.1

ct = -.467 + .434Yt + . 7 6 1 0 ^ - .l82Ct _2 + .003Ct _3 - .l39Ct_^ -' -°94ct-s
(.089)
(.160)
(.195)
(.177)
(.130 )
i. o 4
4.90
4.77
-.93
.02
-1.07
( . 0

R2 = .99898
L-R MPC:

17 a.

se = 1.66

93,7

/

Quarterly MPC:

DW = 1.75
76.4

93.6

100.9

c+ = -.077 + .298Y+ + .682C+ - + .
|
-x.
(.101)
(.108 )
(.131)
2.95
6.30
2.48
R2 = .99898
L-R MPC:

17b.

43.4

9

Sg = 1.6l

93.8

Ct
— =
t

/

Quarterly MPC:

72.2

79-0

1.86

83.7

C
.
Ay,
.297 + .683- ^ + .324__t
(.112 ) t
(.126 )Yt

6.08

R2 = .45771
L-R MPC:

62.2

DW

2.72

DW = 1.90

Se = .005

93.8

/

Quarterly MPC:

63.9

73.3

79.8

84.2

17c. ACt = .628 + .840<Yt - . 0 7 1 ^ , ! - .309-(-Y)t
(.165 )

5.08

R2 = .47297

18a.

(.143)

(.129)
-2.39

-.49

DW = 2.00

Se = 1.63

ct = .167 + . 248 Yt + .733c. - + . 334^Y+ + .215AY+-1
1
(.100)
(.107) "
(.126)
(.103)
2.48
6.84
2.65
2.08
R2 = .99907


L-R MPC:


93.1

Se = 1.55

/

Quarterly MPC:

58.3

DW = 1.91

89.I

90.2

91.0

1

)

5

7

18b.

Ct
vT =
^

ct-l
Y
Y+ i
-251 + .730-tt- + .338— 3 + .228---~
.
H
Y+
y.

(.110)

6.66

R2 = .51281
L-R MPC:

(.120)

(.102) t

2.8l

Se = .0052

93.2

/

Quarterly MPC:

58.9

2.-23
DW = 1.94

91.0

91.6

92.0

l8c. ACt = .654 + .828-AY - .065,\Ct - .297 ( Y)t + .011 ( Y )t _ 1

(.210)
3.94

(.155)
-.4 2

R2 = .473

19a.

L-R MPC;

6.76

2.63

2t06

-.12

Se = 1.57

93.1

/

Quarterly MPC:

58.3

DW= 1.92

89.2

89 .O

90.1

C+ = -.143 + .316Y+ + .836ct_! - .174c, P + .268&Y+
(.100 )

3.16

(.146)

5.73

R2 = .99903
L-R MPC:

(.113 )
-1.55

(.134 )

2.01

Se = 1.58

93.5

/

Quarterly MPC:

58.4

DW = 2.16
80.4

88.7

91.8

Act = .713 + .844AYt - .o634Ct _1 - .036Act _2 - .3i44(-x
Y)t
(.167 )
5.04

(.147)

(.117)
-.31

.43

R2 = .47412

21a.

DW = 2 .0 2

C = .169 + .248Yt + . 734 ct , + .335/NYt + .2l76Yt _1 - . 1 - Yt _2
,
03.
(.101)
(.109) ’
(.127)
(.106)
(.102)
R2 = .99907

20c.

(.112)
.10

Sg = 1 .65

2.44

20a.

(.180)
-1.65

(.132 )
-2.38

Se = 1.65

DW = 2.02

Ct = .099 + .259Yt + .767Ct_! - .045Ct_2 + ,3l84Yt + .l88^Yt-1
(.107 )
2.42
R2 = .99907

L-R MPC:




93.1

(.152 )

5.02

(.145 )
-.3 1

(.137 )

2.32

(.136 )

1.38

se = 1.57
/

Quarterly MPC:

57.8

DW = 1.98

89 .1

91.6

92.1

8

21b.
=

.258 + . T 5 3 ^ i - . 0 3 0 ^ + . 3 2 8 ^ + .gio: Yt-l
'
A
(.15*0 t
4.87

R2 = .513
L-R MFC:

21c.

(.13l)Yt
2.51

(.133) Yt
1.57
DW = 1.98

Se = .005
93.1

/ Quarterly MPC:

58.7

91.0

92.6

92.8

A C t = .700 + .860.l - .068^Ct _1 - .045nCt_2 - .331A(AY)t - .0l4A(,:Y)t _1
Yt
(.237)

3.62

(.157)

(.147)

-.43

-.30

(.214)
-1.55

(.140)

-.10

Se = 1.67

R2 = .47425

22a.

(.1^5)

-.21

DW = 2.01

Ct = .080 + .262Yt+ . 7 8 0 0 ^ - .06lCt _2 + .3l4AYt + .l83aYt.! " .028' Yt_2
(.109)
2.41
R2 = .99908
L-R MPC:




93.2

(.162)

4.80

(.159 )
-.38

(.140)

(.139)

(.HI)

2.25

1.32

-.26

Se = 1.58
/

Quarterly MPC:

57.6

DW = 2.02
89.4

89.5

90.6