Where;
                    I(t) = f[X(t)]/ CPI(t-1) ;

  f[X(t)] = A + SUM[B(n)*DX(n,t)**2) + C(n)*DX(n,t) + D(n)*X(n,t-1);

        n = 1 to 12; DX(n,t) = X(n,t) - X(n,t-1) ;   and;


   n	       X(n,t)                  n        X(n,t)          
   1    Cash and Traveler Checks       7    Individual Loans	
   2    Other Check Deposits	       8    Bank Held Gov't Debt	
   3    Demand Deposits	               9    Other Bank Investment
   4    Other Loans		      10    Savings
   5    Comercial Loans               11    FED Held Gov't Debt
   6    Real Estate Loan              12    CPI(t-1)
                
                              A = 6.05138
 
      n          B(n)	       C(n)	         D(n) 	   
      1      2.51695 E-2      -1.25361 E-1      -5.78174 E-2   
      3      1.42281 E-3      -1.98586 E-2      -3.24311 E-2   
      4     -1.68230 E-5       4.69220 E-3       8.38236 E-3  
      5     -1.09016 E-2       5.37921 E-2       1.20801 E-2  
      6      1.03774 E-2      -1.73130 E-2       9.27001 E-2  
      7     -2.87952 E-2       9.72792 E-2      -3.10036 E-2
      8     -4.78241 E-3      -2.04197 E-3       6.16619 E-2
      9     -2.59567 E-3      -4.21779 E-2       7.25378 E-2
     10     -1.27912 E-6      -2.17870 E-3      -4.52054 E-3
     11     -3.11609 E-2       1.41760 E-1      -6.06438 E-2
     12     9.77020 E-2       -2.96417 E-1      -9.30968 E-2

 
             STATISTIIC 	        CPI        INFLATION
       CORRELATION COEFFICIENT       0.999973      0.819696
       STANDARD DEVIATION            0.514031      2.40617 E-3
       DEGREES OF FREEDOM              109           109

      (Data from FRB St. Louis - Dec., 1972 Through Mar, 1985)

Return to Home Page