# hw are 106 econometric theory and applications stata needed must a

11 Questions About Econometric Theory and Application

Estimate the following equation by OLS using ordinary least squares:

01tttpq=++Î²Î²Îµ

where and . ln()ttpP= ln(Q)ttq=

2. What is your estimate of the elasticity of demand? Your estimate is positive, so it looks like something is wrong. In the following questions, we will try to figure out what is wrong.

3. First, the value of a dollar changed a lot from 1926 to 2014. We should really use real prices rather than nominal prices. Run the regression:

, 01tttrq=++Î²Î²Îµ

where is the real price. ln()ln(CPI)tttrP=âˆ’

4. Compute a 95% confidence interval for Î²1.

5. Test for autocorrelation in the errors of your regression in (3). What are the implications of your test result for interpreting your results in (3) and (4)?

6. Use the Newey-West correction to fix the regression in (3). Try using up to 12 lags in the correction.

7. Plot the log real price (rt) over time. What is the long run trend in prices?

8. It is possible that prices are being driven by some trends unrelated to quantity. Re-estimate your regression model in (3) with the year as an additional right-hand-side variable.

9. Now, letâ€s consider changing the model by adding the lags of price and quantity.

012131tttttrqrqâˆ’âˆ’=++++Î²Î²Î²Î²Îµ

Test for autocorrelation.

10. Using the discussion on slides 21 and 23 from Ch 9, interpret the results from your regression in (9). What is the long-run elasticity of demand? Interpret the error correction model.

11. We are interpreting our regression parameters as inverse elasticities of demand. What precisely are we assuming about how corn production is determined?

Do you need a similar assignment done for you from scratch? We have qualified writers to help you. We assure you an A+ quality paper that is free from plagiarism. Order now for an Amazing Discount! Use Discount Code “Newclient” for a 15% Discount!NB: We do not resell papers. Upon ordering, we do an original paper exclusively for you.

The post hw are 106 econometric theory and applications stata needed must a appeared first on Superb Professors.