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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.
advantages and disadvantages
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.
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Following the general methodology used by econometricians as explained in the session for week 1 (eight steps), explain how you would proceed to determine if a good complies with t
A firm has the following inverse demand function: where Q is Quantity and P is Price (a) Find the firm's marginal revenue function. (b) Find the level of out
The following table contains the ACT scores and the GPA (grade point average) for eight college students. Grade point average is based on a four-point scale and has been rounded to
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