Question 1

Suppose that you have 150 observations on production (yt) and investment (it), and you have estimated the following ADL(3,2) model:

(1 – 0.5L – 0.1L2 – 0.05L3)yt = 0.7 + (0.2 + 0.1L +0.05L2)it (1)

a. Use this model to describe the dynamic effects of investment on production. Your answer should include a calculation of the impact multiplier and the long-run multiplier.

b. Suppose that you can obtain other output associated with the above regression (eg., the residuals et, the R2, the sum of squared residuals, etc.). Carefully explain how you would test each of the null hypotheses given below.

[Hints: In each case your answer should state the extra output you would need from regression of equation (1), the extra regression(s) that you would need to run, an explanation of how you would construct the test statistic, a statement on the distribution of the test statistic under the null hypothesis, and a brief description of your critical region.]

i. H0: investment has no long run effect on production.

ii. H0: there is no third order serial correlation in the errors.

Posted Date: 1/14/2013 9:35:21 AM | Location : USA

Ask an Expert

Related Discussions:- applied, Assignment Help, Ask Question on applied, Get Answer, Expert's Help, applied Discussions

Write discussion on applied
Your posts are moderated

Write your message here..

Related Questions

Hipotesis, acccpt acccpt

Production took place, Scenario: To fundraise for middle school camp the ye... Scenario: To fundraise for middle school camp the year 3 and 4 syndicate designed and produced chocolate treats to sell to the year 1 and 2, and year 5 and 6 students at morning te

Inverse market demand, There are two types of drivers, high-risk drivers wi... There are two types of drivers, high-risk drivers with an accident probability of 2=3 and low risk drivers with an accident probability of 1=3. In case of an accident the driver su

Technical report in buildin a simple linear regression model, how much that... how much that cost ?

Latin Square design, what is the the Latin Square design? What is its appli... what is the the Latin Square design? What is its application in research? please explain this term with very simple but with detailed explanation for effective understanding. I hav

Recitilinear motion, velocity of a particle which moves along the s-axis is... velocity of a particle which moves along the s-axis is given by v=2-4t+5t then find position velocity,acceleration

Che, Chebychev inequality Chebychev inequality

Determine the maximum process variability, You are going to purchase a part... You are going to purchase a part from a specialty vendor.  Your company needs a C p of at least 1.67 on a critical dimension of the part.  The dimensional specification for this p

Utility function, The decision maker ranks lotteries according to the utili... The decision maker ranks lotteries according to the utility function (i) State the independence assumption. Does this decision maker satisfy it? (ii) Is this decision ma

Managerial report, A. Compute descriptive statistics for each stock and the... A. Compute descriptive statistics for each stock and the S&P 500. Comment on your results. Which stocks are most volatile?