Nonlinear specification and dummy variables, Econometrics

Suppose you have a model of capital investment by a U.S. rm. Imagine that yt, x1t
and x2t are annual measures of investment, lagged pro t, and lagged capital stock,
all in real dollars. The sample data contains the years 1935-1954. The model can be
written as
yt = 0 + 1x1t + 2x2t +
Dt + "t ; (1)
where Dt is the dummy variable allowing to distinguish between war and non-war
Dt =
1 if year=1939,...,1945
0 otherwise
Let us de ne a second dummy variable
Ct = 1 ?? Dt
and suppose that in fact we did not run the model (1), but another model (refer to
it as model (2)), where we included both dummies Dt and Ct.
(a) Is there something we should exclude from the model (2) if we want it to be
(b) Suppose that we have the following table of results:
Model (2) (3)
Intercept ? ?
D ? (18:099
C ? ??(10:190
x1 ? ( 0:028
x2 ? (0:163
Can you replace the \?" signs in the table? You can use the information that
the covariance matrix of parameters estimate in model (3) is
D C x1 x2
D 126.8591 114.424 -0.0529091 -0.0290572
C 137.3539 -0.052448 -0.0578449
x1 0.00002845202 -0.0000036976
x2 0.0001380281
Posted Date: 11/16/2012 5:45:03 PM | Location : Czech Republic

Related Discussions:- Nonlinear specification and dummy variables, Assignment Help, Ask Question on Nonlinear specification and dummy variables, Get Answer, Expert's Help, Nonlinear specification and dummy variables Discussions

Write discussion on Nonlinear specification and dummy variables
Your posts are moderated
Related Questions
I could not understand the matrix of technical coefficents

Consider a linear model to explain pricing of houses: Price = ß0 + ß1lotsize + ß2sqrft + ß3bdrms + u (1) E(u| lotsize, sqrft, bdrms)=0 Var (u| lotsize, sqrft, bdrms)=s2 lotsize4

The inverse demand and supply functions for a product are given as:  where P  is  price, Q  is  quantity  and  the  subscripts  d  and  show demand and supply, respectiv

a) Explain what is calculated by a correlation coefficient. b) Why do economists commonly find regression a more useful tool than correlation? c) In a sample of 102 men the corre

the following are the weekly amounts of welfare payments made by the federal government to a sample of six families: $139, $136,$130,$136,$147and$136.what is the range

cost benefit decision invest in college undergraduate 5 years

what are the test for heteroscedasticity?

please provide literature on vecm granger causality block exogenity wald test and also tell how to interpret results

Replicate the estimations in Table 2 on page 82 of Graddy (1995), but excluding the data of King Whiting.