What has happened to the United States Phillips curve? Refer to Example 5.6. Extending the sample to 1977, the following model was estimated:

Where

Y = the year-to-year percentage change in the index of hourly earnings

X = the percent unemployment rate

DT = 1 for observations through 1969

= 0 if otherwise (i.e., for observations from 1970 through 1977)

The regression results were as follows:

Compare these results with those given in Example 5.6.

a. Are the differential intercept and differential dummy coefficients statistically significant? If so, what does that suggest? Show the Phillips curve for the two periods separately.

b. Based on these results, would you say that the Phillips curve is dead?