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Question 1:
a) Explain what is a VAR giving an example both in the form of an equation and matrix. Discuss its benefits and limitations.
b) How can we estimate a VAR involving equations having a contemporaneous feedback term?
c) Distinguish between variance decomposition and impulse response functions.
Question 2:
(a) What are the two types of non-stationarity that exist and show how one of them can be made stationary?
(b) How do we test for a unit root?
(c) What does it mean when two variables are cointegrated?
(d) Using the Engle-Granger approach show how parameters can be estimated in cointegrated systems.
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suppose only one professor teaches economics at your university, would you say that this prof is a monopolist who can exact any price from students in the form of readings assigned
(b) Suppose that the initial conditions are as follows: y0 = 0 and et = 0 for t= 0. Impose the initial conditions in order to find the general solution.
(a) Explain what is meant by the term regression. (b) Describe the justification for the inclusion of a disturbance term in a regression analysis. (c) With appropriate exa
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Given for a closed economy: C = $20 + 0.50Y D I = $40 G = $10 Y D = Y- T 0 T 0 = $5 Determine: (a) the equilibrium
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expected solution plus hypothesis
diff between Mrs and Mrts
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