Develop a simple linear regression model using one independent variable to explain the short-term, “risk-free” rate or yield (i.e., 90-day U.S. Treasury bill ) dependent variable. Use monthly data...

Develop a simple linear regression model using one independent variable to explain the short-term, “risk-free” rate or yield (i.e.,
90-day U.S. Treasury bill) dependent variable. Use monthly data over a recent U.S. business cycle (e.g., 2002 to 2019). Provide an overview of the paper. State and
justify
the null and directional (when warranted) alternative hypothesis for the model. Consider selecting
one
independent variable from among monetary, fiscal, economic, financial, political, demographic and/or another factor you believe relevant. Do
not
use another interest rate as an independent variable for the first regression model. If your variable increases with time, such as the Consumer Price Index or the Money Supply, change the metric to an annual percent change from the prior year. Is the variable tested significant and consistent with the alternative hypothesis or merely “noise” in the market?

Model Develop a simple linear regression model using one independent variable to explain the short-term, “risk-free” rate or yield (i.e., 90-day U.S. Treasury bill) dependent variable. Use monthly data over a recent U.S. business cycle (e.g., 2002 to 2019). Provide an overview of the paper. State and justify the null and directional (when warranted) alternative hypothesis for the model. Consider selecting one independent variable from among monetary, fiscal, economic, financial, political, demographic and/or another factor you believe relevant. Do not use another interest rate as an independent variable for the first regression model. If your variable increases with time, such as the Consumer Price Index or the Money Supply, change the metric to an annual percent change from the prior year. Is the variable tested significant and consistent with the alternative hypothesis or merely “noise” in the market? Ensure you provide and assess simple or descriptive data for the dependent and independent variables used in the regressions to include the three-month T-bill and independent variable selected for the model Present your findings in a report of approximately five pages (excluding tables, statistical output and/or graphs). Briefly provide a context of the economic and financial environment for the variables tested. I. Abstract Write an executive summary that should include at least the following: · The purpose of this paper.  Homework ask to use 3-month (90days) T bill as dependent variable and choose an independent variable which I chose inflation (Core CPI) and to see what happens to the T- Bill rate if CPI has increased on the supply and demand curve. · Techniques used. Simple regression · Overall results. II. Keywords What do you think are the keywords for this paper? III. Introduction · An overview of the paper.  · Define the variables used in the regression models (3-month Treasury Bill and Core Consumer Index). · Business cycle used (2002 -2019). · Source of data (Fred). IV. Literature Reviews Include one or two empirical studies that support the notion that CPI has an impact on the T-bills.  V. Methodology Write the method that we used to develop the model (Simple regression) Model Y = B0 + B1(X) + U 3-month T-bill= Intercept + B1(CPI) + Residuals  · Specify the null and directional alternative hypothesis. H0: B0=B1=0 CPI has no effect on 90-Day T Bill. Ha: B1>0 “An increase in CPI should lead to an increase in 90-day T-Bill.” We proved that an increase in CPI will increase the 90 day t bills. · Run a simple regression and obtain the summary and descriptive statistics (check the reasonableness of the results, the significance of the independent variable, and the consistency of that independent variable with the alternative hypothesis). I already run the simple regression and the regression statistics is below VI. Results Present the graphs of the simple regressions and tables of statistics. VII. Discussion · Analyze and compare the results obtained from the model (T-statistics, R-square, and SER) . · Compare the MSE of regression to the standard deviation of the dependent variable to assess the variation that is reduced by the X variable. Model Use a loanable framework to explain how and why an increase in CPI would impact the supply and demand curve of treasury bills. VIII. Limitations What are the limitations of our model? What are your future recommendations to develop them? IX. Conclusion Summary of the paper. X. References APA style. SUMMARY OUTPUT Regression Statistics Multiple R0.568500991 R Square0.323193377 Adjusted R Square0.320030729 Standard Error1.216030037 Observations216 ANOVA dfSSMSFSignificance F Regression1151.1124447151.1124102.19086.87215E-20 Residual214316.4480171.478729 Total215467.5604617 CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Lower 95.0%Upper 95.0% Intercept-2.533738610.388146836-6.527784.77E-10-3.298819207-1.768658012-3.298819207-1.768658012 CPI1.9712528910.19500086210.108946.87E-201.5868844982.3556212851.5868844982.355621285 % change in CPI3-Month Treasury Bill Mean1.944738Mean1.299831175 Standard Error0.028938Standard Error0.100339697 Median2.002345Median0.919480519 Mode2.22136Mode0.074285714 Standard Deviation0.425293Standard Deviation1.474686347 Sample Variance0.180874Sample Variance2.174699822 Kurtosis0.719626Kurtosis0.429149322 Skewness-0.72238Skewness1.196357996 Range2.32823Range5.015413534 Minimum0.60272Minimum0.011428571 Maximum2.93095Maximum5.026842105 Sum420.0633Sum280.7635338 Count216Count216