Estimate the population regression function

Reference no: EM131444008

Question: Obtain time series data on real business fixed investment (I) and an appropriate rate of interest (r). Consider the following population regression function:

(a) What are the expected signs of the coefficients in this equation?

(b) Explain your reasoning in each case.

(d) Estimate the population regression function.

(e) Which coefficients are statistically significant? Are the signs those expected?

(f) Construct a 99% confidence interval for the coefficient of rt.

(g) Estimate the log-linear version of the population regression function:

(h) Is the estimated interest rate elasticity of investment significant?

(i) Do you expect this elasticity to be elastic or inelastic, and why?

(j) Perform a hypothesis test of whether investment is interest-elastic.

Reference no: EM131444008

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