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The questions are in the attached word document and the data for the questions is in the excel spreadsheet attached.




Table 7.11 gives data for the manufacturing sector of the Greek economy for the;period 19611987.;A. See if the CobbDouglas production function fits the data given in the table and;interpret the results. What general conclusion do you draw?;B. Now consider the following model;Output/labor =;Where the regress and represents labor productivity and the repressor represents the;capital labor ratio. What is the economic significance of such a relationship, if any?;Estimate the parameters of this model and interpret your results.;7.24 Table 7.12 gives data for real consumption expenditure, real income, real;wealth, and real interest rates for the U.S. for the years 19472000. These data will be;used again for Exercise 8.35.;A. Given the data in the table, estimate the linear consumption function using income;wealth, and interest rate. What is the fitted equation?;B. What do the estimated coefficients indicate about the variables relationships to;consumption expenditure?;8.35 Refer to Exercise 7.24 and the data in Table 7.12 concerning four;economic variables in the U.S. from 19472000.;A. Based on the regression of consumption expenditure on real income, real wealth and;real interest rate, find out which of the regression coefficients are individually statistically;significant at the 5 percent level of significance. Are the signs of the estimated;coefficients in accord with economic theory?;B. Based on the results in (a), how would you estimate the income, wealth, and interest;rate elasticitys? What additional information, if any, do you need to compute the;elasticitys?;C. How would you test the hypothesis that the income and wealth elasticitys are the;same? Show the necessary calculations.;D. Suppose instead of the linear consumption function estimated in (a), you regress the;logarithm of consumption expenditure on the logarithms of income and wealth and the;interest rate. Show the regression results. How would you interpret the results?;E. What are the incomes and wealth elasticitys estimated in (d)? How would you;interpret the coefficient of the interest rate estimated in (d)?;F. In the regression in (d) could you have used the logarithm of the interest rate instead;of the interest rate? Why or why not?;G. How would you compare the elasticitys estimated in (b) and in (d)?;H. Between the regression models estimated in (a) and (d), which would you prefer?;Why?;I. Suppose instead of estimating the model given in (d), you only regress the logarithm of;consumption expenditure on the logarithm of income. How would you decide if it is worth;adding the logarithm of wealth in the model? And how would you decide if it is worth;adding both the logarithm of wealth and interest rate variables in the model?


Paper#15531 | Written in 18-Jul-2015

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