The data on after-tax corporate profits (X) and net corporate dividend payments (Y) ($ billions) of private corporations in the US for the quarterly period of 2007:1 to 2011:3 are presented in file Tax.wf1.
a. Regress dividend payments (Y) on after-tax corporate profits (X) to find out if there is a relationship between the two variables.
b. To see if the dividend payments exhibit any seasonal pattern, develop a suitable indicator variable regression model and estimate it.
c. In developing the model with the seasonal indicator variables, how would you take into account that the intercept as well as the slope coefficient may vary from quarter to quarter.
d. When would you regress dividend payments (Y) on after-tax corporate profits (X), disregarding seasonal variation.
e. Based on your results, what can you say about the seasonal pattern, if any, in the dividend payment policies of private corporations? Is this what you would have expected?
The question belongs to Statistics and it discusses about calculation of regression and interpreting the results for the given data.
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