Congratulation to the timeliness of your
question! After what happened in the last couple of weeks, we may in fact stand
again at the beginning of a Keynesian revolution. This notwithstanding, working
with real variables should lend your model greater credibility. Putting
interest rates on the right hand side of the equation is not an alternative to working
with real variables; it just tells you the impact of inflation on whatever you
test for.
CEO, Goldman Sucks J
From:
gretl-users-bounces@lists.wfu.edu [mailto:gretl-users-bounces@lists.wfu.edu] On Behalf Of Mariusz Doszyn
Sent: Thursday, September 25, 2008
3:55 PM
To: Gretl list
Subject: [Gretl-users]
Inflation...
Hello...
This question is not connected directly with gretl but I'll be
grateful for your opinions. I've estimated panel data models for
mainly UE countries with consumption, gross savings, invstments and money
supply (M1) as dependent variables and income, interes rates, consumer
prices index and time variable as an independent variables. Should all
theses variables be corrected with restpect to inflation rates? Or maybe
it's better idea to put inflation rate as an independent variable? Many
keynesian economists used to analylize nominal variables...
Thanks in advance for your help...
Best wishes...
Mariusz