Question: Continuing with Exercise, how would you find out if there are structural breaks in the relationship between PCE and DPI? Show the necessary calculations.
Exercise: Collect quarterly data on personal consumption expenditure (PCE) and disposable personal income (DPI), both adjusted for inflation, and regress personal consumption expenditure on personal disposable income. If you think there is a seasonal pattern in the data, how would you deseasonalize the data using dummy variables? Show the necessary calculations.