BST956 Individual Assignment Coursework
Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit
BST956 Individual Assignment Coursework
Submission deadline 11am 23/02/2023
Answer ALL questions.
Question 1
Consider the following aggregate demand function for passenger cars:
ln Yt = β1 + β2 ln X2t + β3 ln X3t + β3 ln X4t + β5 ln X5t + β6 ln X6t + ut,
Where ln = natural log; Y=Demand for passenger cars, X2=New car consumer price index; X3=Consumer price index; X4=Personal disposable income ($ billion); X5=Interest rate (%); X6=Employed civilian labour force (thousand). We have the following regression result:
Briefly clarify whether the above model suffers from multicolienraity problem? Explain your answer. How to fix the multicollinearity issue?
[Total: 25 marks]
Question 2
Consider the following a regression model and the related regression output.
Where Se = standard errors of the three slope coefficients.
F-critical value at the 5% significance level equals 3.Critical t-value at the 5% significance level equals 1.96.
(a) Explain what the F-test is? Conduct the test. [4 marks]
|
(b) |
Test the null hypothesis that X2 has no effect on the dependent variable versus that it has a positive effect (based on the t-test at the 5% significance level). Interpret the results of the test. [4 marks] |
(c) Interpret the coefficient of X2 . How does the interpretation change if the model is a log-linear model (i.e., the dependent variable is in the logarithmic form (lnY))? [3 marks]
(d) Using 5% significance level, test the following null hypothesis: the coefficient on X4 =
8 versus an alternative hypothesis: the coefficient on X4 ≠ 8 [4 marks]
[Total: 15 marks]
Question 3
Consider the estimation results below, Note MALE, which is a dummy variable that is 1 for male respondents and 0 for female ones.
a- What is a dummy variable? What is the purpose of dummy variables in regression? [7 marks]
b- What kind of test is being conducted? [4 marks]
c- Interpret the results on Height and Male coefficients. [4 marks]
[Total: 15 marks]
Question 4
a- Briefly explain the meaning and causes of autocorrelation. Identify and explain the problems that the presence of autocorrelation causes in an OLS estimator. [13 marks]
b- Durbin Watson test is one of the formal tests for detecting the presence of
autocorrelation. Discuss the Durbin Watson test. Are there any drawbacks in the test? [12 marks]
[Total: 25 marks]
Question 5
With panel data Analysis, the most commonly estimated models are fixed effects and random effects models. Using no more than 500 words, write an essay discussing the major differences between fixed effects and random effects models.
[Total: 20 marks]
2023-02-15