This report presents an analysis of economic data using the Vector Auto Regression (VAR) methodology, a multivariate time series technique. The report details the steps involved in performing VAR analysis using STATA, including data import, variable creation, and model specification. It explains the interpretation of the VAR output, including the inflation, unemployment, and interest rate equations, and the covariance matrix of residuals. The report further evaluates the VAR output using impulse response functions, demonstrating how to create and interpret impulse-response graphs to assess the impact of shocks over time. The analysis utilizes the Stock Watson data and provides references for further reading on VAR models and STATA implementation.
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