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
years:
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
estimable?
(b) Suppose that we have the following table of results:
Model (2) (3)
Intercept ? ?
D ? (18:099
11:26)
C ? ??(10:190
11:72)
x1 ? ( 0:028
0:0053)
x2 ? (0:163
0:012)
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
2
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
Why use auxiliary regression? What are the benefits of using it?

How can a person achieve his goal for development?Explain it with 5 examples.


This problem refers to Doughtery's Educational Attainment and Earnings Functions (EAEF) data set, accessible through the course website. This data is a subset of the U.S. National

1. Consider a mixture of one mole of Nitroglycerin and one mole of Ammonium Nitrate a. Write the detonation equation for this mixture b. Using class notes, posted articles in

I have a few econometric that require the use of R to generate the answer

A firm has the certain total revenue (TR) function:      TR=(4Q+2) e 4Q where Q  is Quantity      Find the firm's marginal revenue function.

why do we make use of regression analysis in our econometrics analysis


For each pair of terms/concepts, define each term/concept and explain the relationship between them. The ideal answer is three sentences. One for each definition and one for the re