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Test the arithmetic lag restrictions given
Course:- Econometrics
Reference No.:- EM131409590

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Consider the Consumption-Income data given in Table 5.1 and provided on the Springer web site as CONSUMP.DAT. Estimate a Consumption-Income regression in logs that allows for a six year lag on income as follows:

(a) Use the linear arithmetic lag given in equation (6.2). Show that this result can also be obtained as an Almon lag first-degree polynomial with a far end point constraint.

(b) Use an Almon lag second-degree polynomial, described in equation (6.4), imposing the near end point constraint.

(c) Use an Almon lag second-degree polynomial imposing the far end point constraint.

(d) Use an Almon lag second-degree polynomial imposing both end point constraints.

(e) Using Chow's F-statistic, test the arithmetic lag restrictions given in part (a).

(f) Using Chow's F-statistic, test the Almon lag restrictions implied by the model in part (b).

(g) Repeat part (f) for the restrictions imposed in parts (c) and (d).

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