An analyst is examining the annual growth of the money supply for a country over the past 30 years. This country experienced a central bank policy shift 15 years ago, which altered the approach to the management of the money supply. The analyst estimated a model using the annual growth rate in the money supply regressed on the variable (SHIFT) that takes on a value of 0 before the policy shift and 1 after. She estimated the values in Exhibit 1:

Exhibit 1:

SHIFT Estimates
Coefficients Standard Error t-Stat.
Intercept 5.767264 0.445229 12.95348
SHIFT −5.13912 0.629649 −8.16188

Critical t-values, level of significance of 0.05:

eOne-sided, left side: −1.701

fOne-sided, right side: +1.701

gTwo-sided: ±2.048 The variable SHIFT is best described as: