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05-07-2019

Product code Statistics-PH355

 

BA 2031 MACROECONOMICS ANALYSIS II

ASSIGNMENT

 

DUE DATE: 5 DECEMBER 2018 Wednesday before 5:00hrs (PM).
 

Instructions: Choose any ONE of the two questions. Answer must be printed on A4 size pages. Provide one cover page to show your name and class. Do not submit project with ring binding or any plastic material.


Question 2

The following is the real consumption function of United States, it consists of real consumption expenditure, real income, real wealth, and real interest rates in the United States for the years 1947 to 2000. Download Table 2 to run the regression in EViews 8.

 

Where C = Real consumption expenditure

            Y = Real income

            W = Real wealth

            R = real interest rates

 

Now estimate the consumption function:

 

            Ct = b1 + b2Yt + b3Wt + b4Rt + ut

Consumption =      
 

From macroeconomic theory it is known that consumption generally depends on certain important factors such as real income, etc. In view of these considerations, answer the following questions:

 

(a)               Use Eviews 8 to run the above regression using data from Table 2 and show the results.

(2 marks)

 

 

 

(b)   Explain the economic relationship between the dependent and independent variables of the regression equation above without looking at the regression result. State and explain any other variables that you would include in the equation above.

            Ct = b1 + b2Yt + b3Wt + b4Rt + ut

 

 

 

 [8 marks]

 

(c)               Interpret the OLS regression results shown above in terms of:

(i)                 Economic interpretation of the results.

 [8 marks]

 

(ii)              Comment of the econometric/statistical interpretation of the results.

 [10 marks]

 

(d)               Are the empirical results in accordance with prior macroeconomic theoretical expectations? Explain.

 [2 marks]

[Total marks: 30]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eviews - Regression Result

 

Consumption Expenditure:

 

Dependent Variable: C01

 

 

Method: Least Squares

 

 

Date: 11/29/18   Time: 12:09

 

 

Sample: 1947 2000

 

 

Included observations: 54

 

 

 

 

 

 

 

 

 

 

 

 

Variable

Coefficient

Std. Error

t-Statistic

Prob. 

 

 

 

 

 

 

 

 

 

 

C

-20.63274

12.82699

-1.608541

0.1140

YD

0.734028

0.013752

53.37622

0.0000

WEALTH

0.035976

0.002483

14.48822

0.0000

INTEREST

-5.521224

2.306675

-2.393585

0.0205

 

 

 

 

 

 

 

 

 

 

R-squared

0.999402

    Mean dependent var

2888.356

Adjusted R-squared

0.999366

    S.D. dependent var

1500.903

S.E. of regression

37.79877

    Akaike info criterion

10.17362

Sum squared resid

71437.35

    Schwarz criterion

10.32095

Log likelihood

-270.6877

    Hannan-Quinn criter.

10.23044

F-statistic

27838.41

    Durbin-Watson stat

1.310554

Prob(F-statistic)

0.000000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Download Questions

BA 2031 MACROECONOMICS ANALYSIS II ASSIGNMENT DUE DATE: 5 DECEMBER 2018 Wednesday before 5:00hrs (PM). Instructions: Choose any ONE of the two questions. Answer must be printed on A4 size pages. Provide one cover page to show your name and class. Do not submit project with ring binding or any plastic material. Question 2 The following is the real consumption function of United States, it consists of real consumption expenditure, real income, real wealth, and real interest rates in the United States for the years 1947 to 2000. Download Table 2 to run the regression in EViews 8.

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