Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Econometrics - Essay Example

Comments (0) Cite this document
1. a). The assumptions made by the classical linear regression model are not necessary to estimate ordinary least squares because when estimating ordinary least squares the objective is to minimize the squared deviations from the linear regression line. The first two assumptions which state that (1) the model is linear and (2) that the random error term is zero are therefore not considered in computing the ordinary least squares…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.4% of users find it useful
Read TextPreview

Extract of sample "Econometrics"

Download file to see previous pages The classical linear regression model is written such that the coefficients of the independent variables measure the sensitivities of the dependent variable on the independent variables. It is usually assumed that there is an error term which measures the unexplained variance of the dependent variable that is not accounted for by the independent variable. Therefore, only a proportion of the variance is explained by the regression analysis.
c) Any particular normal distribution can be related to the normal distribution because the normality assumption allows us to perform statistical tests concerning the estimated parameters using the normal distribution and related tests involving chi-square, t-distributions and F-distributions.
d) It is not appropriate to take natural logarithms of interest rates, expressed as percentages because natural logarithms of interest rates are taken to minimize autocorrelations and render the interest rates scale free. However, interest rates expressed as percentages are scale free and uncorrelated already and therefore there is no need to take natural logarithms again.
e) The Durbin Watson statistic can be used to estimat...
2. a) Omitting a significant variable from a regression analysis overstates the marginal impact of other variables in the model. For example, lets consider the impact of education on earnings. This relationship can be written in the form of a regression model as follows:
(1) (Greene, 2003: p. 9).
The above regression neglects the possibility that most people have higher incomes when they are older than when they are young, regardless of their education. (Greene, 2003: p. 9). Thus overstates the marginal impact of education on earnings. If age and education are positively related, then the regression model will associate all the observed increases in income with increases in education. Therefore a better way to study the determinants of income is to include the effects of age in the regression as follows:
according to Greene (2003: p. 9) earnings tend to rise less rapidly in the later earning years than in the early ones. To accommodate this possibility, the above model can be extended as follows:
(3) (Greene, 2003: p. 9).
b). Regression analysis studies the relationship between two or more variables. One variable is considered independent while two or more variables are considered to be independent. (Anderson et al, 2005). The aim of the regression analysis is to measure how changes in the dependent variable are explained by changes in the independent variables. Including an insignificant variable as one of the independent variables may minimize the effects of the actual variable causing the variation in the independent variable. Like in the example above, if truly age is not a determinant of income as ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Econometrics Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Econometrics Essay Example | Topics and Well Written Essays - 750 words. Retrieved from
(Econometrics Essay Example | Topics and Well Written Essays - 750 Words)
Econometrics Essay Example | Topics and Well Written Essays - 750 Words.
“Econometrics Essay Example | Topics and Well Written Essays - 750 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document



...?Econometrics Regression Model Question A The other hypothesis to be investigated by this regression was weather the level of education of women had an impact on their level of availability or participation in the work place. This was to be monitored using the coefficient educ. The availability and increase of other sources of income for the family was also considered to find out weather the same affected their level of commitment at work. This was done using the variable nwifeinc. The estimated coefficients had the signs as expected and were of statistical significance, this was demonstrated clearly buy the patterns displayed by the respective graphs of the variable coefficients. It therefore demonstrated beyond any reasonable doubt...
3 Pages(750 words)Assignment

Econometrics : Capital Asset Pricing Model regression

...Explanation (in detail) Excel file (CAPM 73-03). It is so d because the Capital Assets Pricing Model (CAPM) is created on 1973:01 – 2002:12 data and forecasted for 2003:01 – 2005:12. Chronologically the first worksheet was *1 Initial Data*. *1 Initial Data* worksheet In B-P columns there are companies’ share prices. Q column is for P&S 500 values. Treasury bill is in the R column. As Treasury bill is given in *%* and each value is given for a certain day (for instance, 03.01.1973), then we have to make a monthly average value and take it in fraction (just to divide into 100%). The formula is , where is at the beginning data, - at the end. The formula for data in T column is , where is at the beginning data, at the end... (in detail)...
12 Pages(3000 words)Dissertation


...Part The key hypothesis in this paper is that “Democracies have bad rood conditions compared to autocratic rule holding all other explanatory variables constant”.. This means that governments in the world which are perceived or are build on democratic principles have poor rood networks. The authors motivates this hypothesis by first looking at the reasons why autocratic governments may be forced to have good roads probably to enable troops to move around in case of both internal and external aggressions. Further, the author argues that autocratic government’s belief that good infrastructure facilities tend to blind the electorate. On the other hand, democratically elected governments due to the aspect of resource distribution may... The key...
5 Pages(1250 words)Speech or Presentation


...ECONOMETRICS PART Question a) From table the correlation coefficient between health status and years of education is 0.33. When the correlation coefficient in absolute values is between 0.1 and 0.5, there is a weak correlation between the variables and when the values are between 0.5 and 0.9 there is a strong correlation. In this case, there is a weak positive correlation between the two variables. Since the coefficient is positive, there is a positive linear relationship between health status and years of education. When years in education increase, there is an improvement in health status of the individual. Question 1 (b) i. Number of doctor visits and gender The results of the regression are demonstrated in table 2. The coefficient...
16 Pages(4000 words)Essay


...for a similar number of producers. (Antle 1986, p.1). Prior to any equation can be estimated, it should be completely particular. Specifying a great econometric equation includes three parts: choosing the correct independent factors, the appropriate functional form, and the correct form on the stochastic miscalculation term. Those experts can determine which separate variables to include in regression equations is often a source connected with both strength and a weakness in econometrics. The strength is that this equations can be formulated to match individual requires, but the actual weakness is usually that experts can estimate a variety of specifications until finally they find one which “proves” the...
8 Pages(2000 words)Essay

SE-5004L Statistics and Econometrics, Semester Two, 2013/4

...STATISTICS AND ECONOMETRICS By of the of the School Present your data in a table showing the names of the variables. Make sure the full definitions and sources of each variable are given. SOLUTION In the table 1 below, we present the data used in this project. The data is a time series data spanning from 2001 to 2012. The dependent variable represents the per capita on cheese while the independent variable is the unemployment rate from UK. time cheese Unemployment rate 2001 57 5.1 2002 58 5.2 2003 59 5.0 2004 60 4.8 2005 63 4.9 2006 64 5.5 2007 68 5.4 2008 70 5.7 2009 75 7.6 2010 79 7.9 2011 80 8.1 2012 81 8.0 2. The first equation to be estimated is : i) In terms of economic theory what sign would you expect to find... AND...
6 Pages(1500 words)Statistics Project


...Question One You want to estimate the following linear regression model: With a) Assume that Can you compute the least squares estimator in this model? Explain your answer and show your work. SOLUTION (a) (b) From (b), satisfies (c) And satisfies We have however been given so substituting yields; b) Assume again that : Can you obtain a univariate model: that is equivalent to the multivariate linear regression model (1)? If this is possible, can you compute the least squares estimator for this univariate model? Explain your answer... One You want to...
4 Pages(1000 words)Assignment

Econometrics 2

...ECONOMETRICS By Introduction The supermarket group ‘Dodo’ is concernedas their stores have been recording falling profits in London in two consecutive years. This paper seek to analyze and identify the factors, both positive and negative factors, affecting the store profits. In addition, recommendations will be adopted for the store optimization and location. Using the data sets provided such as of the annual profits (Revenues minus costs) of the shops and their characteristics, this paper intends to explain the factors affecting the profit levels. Analysis According to the analysis below, the dependent variable is Profit. The independent variables on the other hand include; Workers, Population Density, Average Income, Products, Price...
4 Pages(1000 words)Essay

Econometrics and Purchasing Power Parity

... in the growth rate of the exchange rate more comprehensively. Among these variables could be the short-term interest rates for both countries across the period under investigation. References Enders, W, 1995, Applied Econometric Time Series, John Wiley and Sons, New York. Gujurati, D, 2003, Basic Econometrics, McGraw-Hill, New York. Penn World Table Data, 2008, Center for International Comparisons at the University of Pennsylvania, viewed 21 May 2008, . Simonoff, J, 2006, Purchasing power parity: is it true?, viewed 21 May 2008, . Suranovic, S, 1997, International Finance Theory and Policy, viewed 21 May 2008, . United Nations Data, 2008, United Nations, viewed 21 May 2008, .... Econometrics 211 Assignment – Topic...
7 Pages(1750 words)Assignment


The law proposes an inverse relationship between demanded quantity and price and testing the hypothesis would aim at investigating the relationship. The objective is stated bellow.
Developing a set of hypotheses for the objective would then follow. This would involve the formulation of a rebuttable proposal to be accepted or rejected for its alternative hypothesis. The hypothesis would focus on the law’s proposed relationship and is stated below.
Step 3 would involve the determination of the level of significance for the test. This determines the level of precision of the test also establishes a criterion for accepting or rejecting the null hypothesis. A level of significance of 1 percent would be preferred for gre...
8 Pages(2000 words)Assignment

Applied Econometrics

...s are not included as having possible effects in the female LFP. The author did not include all the possible factors that may affect the female LFP; thus, the analysis is not that perfect for the claims of the impact of culture on female LFP (Fernández, 2006). References List ASTERIOU, D., & HALL, S. G. (2011). Applied econometrics. Basingstoke [England], Palgrave Macmillan. FERNÁNDEZ, R. (2006). Women, Work and Culture. New York City, CEPR, NBER. FOX, J., & FOX, J. (2008). Applied regression analysis and generalized linear models. Los Angeles, Sage. JONES, A. (2008). Applied econometrics for health economists: a practical guide. Abingdon, Radcliffe. WOOLDRIDGE, J. (2011). Introductory econometrics. [S.l.],...
6 Pages(1500 words)Assignment

Econometrics and Cobb-Douglas Function

The coefficients derived from the Cobb-Douglas model are very useful in evaluating the characteristics of a given time series data in econometrics. The coefficients are used to examine characteristics such as elasticity of production and return to scale. 
The individual significance of the variables yields the elasticity of production. The elasticity of production refers to the responsiveness of production to changes in input (capital and labor). The coefficients from the Cobb-Douglas model enable us to understand both the capital elasticity of production and the labor elasticity of production (Greene, 1993).
The capital elasticity of production is given by our model and thus is equal to 0.7489%. This means tha...
12 Pages(3000 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Econometrics for FREE!

Contact Us