Econometric Model

The file INCOME.XLS contains data on the logs of personal income and personal consumption.
a) Calculate and interpret descriptive statistics for both personal income and change in personal income data. Do the same for personal consumption and its change.
b) Plot and interpret US personal income and change in US personal income.
c) Run a regression between Income and Consumption.
d) Estimate the correlation between income and consumption. Interpret your result.
e) Test for autocorrelation
f) Test for multicollinearity
g) Test for heteroskedasticity
h) Estimate Income first differences
i) Estimate Consumption first differences
j) Log your variables
k) Lag both variables one period
l) Plot residuals
m) Based on the presented data, develop a basic context to support an econometric analysis. Afterwards propose a research question to be addressed and identify research hypothesis/es to be tested in the context of your research problem. Run appropriate test/s to provide an econometric solution to the identified problem. Your final discussion should be supported with appropriate suggestions and comments on how to improve the proposed econometric model and offer a critical insight on implications of your results and potential implications for policy decision making.