+1-415-670-9189
info@expertsmind.com
Estimate of cross-price elasticity of demand for gasoline
Course:- Econometrics
Reference No.:- EM13149057




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Econometrics

1. Here we will be using the same dataset from Empirical Exercise 2; the file is included in the Assignments folder for this week. The filename is "gas_expenditure_hw3.gdt". It is already in Gretl format so you simply need to save it to your computer, open Gretl, click file > open data > user file and browse for the file. This file includes the variable that we constructed in the exercise, RealGasCap, real per capita gasoline expenditures. However, notice that I have scaled this variable to be measured in U.S. dollars to make interpretation more straightforward.

Therefore, our variable list is as follows:
Year = Year, 1953-2004
GasExp = total U.S. gasoline expenditure in billions of U.S. dollars
Pop = U.S. total population in thousands
Gasp = Price index for gasoline (in dollars)
Income = Per capita disposable income
PNC = Price index for new cars
PUC = Price index for used cars
PPT= Price index for public transportation
PD = Aggregate price index for consumer durables
PN = Aggregate price index for consumer nondurables
PS = Aggregate price index for consumer services
RealGasCap = real per capita gasoline expenditures (U.S. dollars)

a. Estimate the following log-linear model and display your results.

ln?RealGasCapt= β12 ln ?Incomet+ β3 ln?Gaspt+β4 ln?PNCt5 lnPUCt + ut
b. Provide an estimate of the own price elasticity of demand for gasoline. Is it statistically significant? Does it align with economic theory? Give an interpretation of your result.

c. Provide an estimate of the cross-price elasticity of demand for gasoline, both with respect to new cars and with respect to used cars. Are these estimates statistically significant? Do they align with economic theory? Give an interpretation of your result.

d. Provide an estimate of the income elasticity of demand for gasoline. Is it statistically greater than zero? In other words, is gasoline a normal good? Be sure to state your null and alternative hypotheses, your test statistic, your rejection region, and your conclusion. Give an interpretation of your result.

e. Suppose we are interested in whether the demand for gasoline is income inelastic. Construct a test of the hypothesis that the income elasticity is less than or equal to one against the alternative that it is greater than one. Be sure to state your null and alternative hypotheses, your test statistic, your rejection region, and your conclusion.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Econometrics) Materials
In round numbers, real output doubled two times in the 40 years between 1950 and 1990, so it doubled every 20 years. This means that real output grew at a rate z that solves
What will the multiplier be when the MPS is 0.4, 0.6, 1, ½ and 0 How much of a change in theeconomy will result if businesses increase their level of investment by $8 Billion
Suppose Eddie's demand curve for text messages is T=150-500Pt, where T stands for the number of text messages and Pt represents the price of text messages. What is Eddie's c
Draw a separate box diagram to show what the contract curve might look like if Aisha was concerned about very low consumption of food and clothing by Robin, but Robin was on
Using (13.44) and the choice of numeraire in (13.45), set up the household maximization problem in the form of the current-value Hamiltonian (derive the budget constraint ex
A successful engineer wants to fund an endowment for a university which will pay $10,000, $15,000, $20,000, and $25,000 for the 1st, 2nd, 3rd, and 4th quarters respectively,
Draw supply and demand diagrams from two different markets, and label the markets A and B. Then use your diagrams to illustrate the impact of the following events. In each c
Describe what Smith meant by the "invisible hand." What is the mechanism by which selfish interests are made compatible with-indeed, made the agent for- successful social pr