+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
Calculate the inflation rate in the CPI and create a scatterplot that has the unemployment rate on the X axis and the inflation rate on the Y axis. Does your graph look anyt
Show that for an odd number of voters and a given preference profile over a fixed number of alternatives, an alternative is a Condorcet winner if and only if it emerges as t
Suppose the price elasticity of demand for vanity plates in your state is 0.60. The initial price is $20 and the initial quantity is 1,000 plates per week. Suppose the state
A medical clinic is being ran. Q=KL is the production function. Q is the number of patients treated. K & L are inputs. K = number of nurses, L = number of doctors. Price of
put $20,000 on deposit on your 13th birthday at 5 percent compounded annually. On your 14th birthday, the account begins earning 6 percent. Then on your 15th birthday, it beg
provide a 50 percent tuition reduction for those graduating in the top 10 percent of their high school class, 33 percent reduction for those in the top 20 percent, and 25 pe
Three planks are connected as shown by bolts of 14-mm diameter spaced every 150 mm along the longitudinal axis of the beam. For a vertical shear of 10 kN, determine the aver
If inflation is lower in Germany than in Spain (as it is), and the exchange rate between the two countries is fixed (as it is, because of the monetary union), what is likely