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Sunday 12 February 2012

Inflation & Change in Interest Rates in U.S.

Below are the trends lines of Inflation, as measured by percentage change in Producer Price Index, with quarterly frequency and base year 1982, and 3 months U.S. Treasury Bill Interest Rates. I ran a regression on both of these values and got the adjusted R square to be 6.7% which is quite less. The trend graphs also show independent results. Why there is no relation between these two variables... I haven't figured it out but the trends are interesting. 























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