Solncy variables in x and a previous value of y; see Example 4.4. a. For estimating B, why do we obtain the same estimator if the growth in y, log(y)- log(y 1), is used instead as the dependent variable? b. Suppose that there are no covariates x in the equation. Show that, if the dis- tributions of y and y-1 are identical, then a < 1. This is the regression-to-the-mean phenomenon in a dynamic setting. (Hint: Show that x1 = Corr[log(y), log(y-1)]-)
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- Variables typically included in a multivariate demand function (other than the price and quantity of the item the demand function represents) are consumer tastes and preferences, the number of buyers, spendable (disposable) income, prices of substitute goods, prices of complementary goods, advertising expenditures, weather, and expectations. Recalling that the price of the item being considered is placed on the vertical axis, and the quantity on the horizontal axis, the other variables are termed demand shifters. Please answer the following questions about the affect changes in other variables might have on the demand for the item. These changes will either cause demand to increase (shift right) or decrease (shift left). Use either word as applicable, for the short answer. If the price of a good increases because the demand for it increases, What would you expect the demand for its complement to do? If the demand for coffee beans increases, then what is likely to happen…Consider the following model of house prices: lhprice=β0+β1bdrms+β2llotsize+β3lsqrft+u The variables are defined as: lhprice = the natural log of the house price bedrms = the number of bedrooms llotsize = the natural log of the land or lot size lsqrft = the natural log of the floor space of the house in square feet. You may assume the Gauss Markov Assumptions hold. Which of the following will make our inference on the partial effect of the number of bedrooms on the house price less precise? a) A smaller variance of any unobserved factors captured in the error term, u. b) A larger sample size. c) More variation in the number of bedrooms across the observations in the sample. d) None of the possible answers describe something that would make our inference less precise. e) A higher correlation between the number of bedrooms and the floor space of the house.Using Y as the dependent variable and X1, X2, X3, X4 and X5 as the explanatoryvariables, formulate an econometric model for data that is (i) time series data (ii)cross-sectional data and (iii) panel data – (Hint: please specify the specific model herenot its general form).
- 1.1 Which of the following is NOT a good reason for including a disturbance term in a regression equation?/ A. To allow for random influences on the dependent variable/ B. To allow for errors in the measurement of the dependent variable/ C. It captures omitted determinants of the dependent variable D. To allow for the non-zero mean of the dependent variable/ 1.2 Consider the equation Y = B1 + B2X2 + u. A null hypothesis of H0: B2 = 0 means that/ A. X2 has no effect on the expected value of Y / B. B2 has no effect on the expected value of Y/ C. X2 has no effect on the expected value of B2 / D. Y has no effect on the expected value of X2/ 1.3 The OLS residuals in the multiple regression model/ A. can be calculated by subtracting the fitted values from the actual values / B. are zero because the predicted values are another name for forecasted values / C. are typically the same as the population regression function errors / D. cannot be calculated because there…You model the relationship between citizens' consumption and their monthly income. Based on your experience, you know that people with lower income usually spend 60% of their income on consumption. For people with higher income, some may spend only 40% on consumption, while others spend 70% on consumption. What is the potential problem when you use a linear regression model? E[u\x] #0 Heteroskedasticity Perfect colinearity No variability in x None of above1. Suppose that we are interested in measuring the relationship between hourly wage and output productivity in the U.S economy. Variables hrwage(t) and outphr(t) denote the average hourly wage and output productivity in the U.S economy for year t. We start by estimating the model specification shown in equation (1) below: log(hrwage) = Bo + B₁ log(outphre) + ut. where log(.) denotes the natural logarithm and ut is the error term. (a) Provide a brief interpretation of parameters 0 and 1 in (1).
- In macroeconomics, the marginal propensity to consume (MPC) is the proportion of extra income that is spent on consumption, and it is important for determining the effects of monetary and fiscal policy. In this exercise, you will estimate the MPC with the slope from regression analysis. 1. Your two variables are consumption and income. Which is the dependent variable and which is the independent variable? 2. You have the following data on consumption and income (in $10,000s). Income Consumption 7 9 11 5 8 2 9 12 7 2 7 2 8 9 Make a scatterplot and draw the line of best fit.Consider the system of equations: pi = β0 + β0qi + β2ti + β3zi + ui qi = α0 + α1pi + α2ki + ԑi where p and q are endogenous variables.t, z and k are exogenous variables.u and ԑ are disturbance terms. And i is cross section. Explain how you would go about estimating the stated system of equations.state the limitations of using a cubic function with inflection point to model the side of a hill. What assumptions have been made that may affect the reasonableness of your solutions?
- Come up with two variables that, in your view, are related, indicate the name of these variables as well as why these variables are related; determine which variable is the dependent variable and which one is the independent variable. Draw a line graph by hand, labeling the vertical and horizontal axis consistent with your choice of variables. The line in the line graph has to represent, what, in your view, is the relationship between the two variables. Describe your graph verbally in your post (no need to upload the graph itself). Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.In an intertemporal optimizing model consumption, a consumer living from time zero (0) to time t has a longer utility: U (C)= ln C. The market interest rate is r and the consumer is assuming no inheritance. Derive the consumption relationship and the marginal utilities between two adjacent periods. Using a diagram, explain the time profiles of paths based on (i) above. Show that consumption is proportional to the present value of future income at time zero (0) at a given interest rate.3.1 Yell-O Yew-Boats, Ltd. produces a popular brand of pointy birds called Blue Meanies. Consider the demand and supply equations for Blue Meanies: QD. = 150 – 2P, +0.0011+1.5P, Qs.x = 60+4P, - 2.5W where Q, = monthly per-family consumption of Blue Meanies P = price per unit of Blue Meanies I = median annual per-family income = $25,000 P, = price per unit of Apple Bonkers = $5.00 W = hourly per-worker wage rate = $8.60 a. What type of good is an Apple Bonker? b. What are the equilibrium price and quantity of Blue Meanies? c. Suppose that median per-family income increases by $6,000. What are the new equilibrium price and quantity of Blue Meanies? d. Suppose that in addition to the increase in median per-family ncome, collective bargaining by Blue Meanie Local #666 resulted in CHAPTER EXERCISES 143 a $2.40 hourly increase in the wage rate. What are the new equilib rium price and quantity? e. In a single diagram, illustrate your answers to parts b, c, and d.