Consider the following Keynesian model of income determination
Where,
C= Consumption expenditure
I=Investment expenditure
Y=Income
G=Government expenditure
G₁ and Yt-1 are assumed predetermined
(a) State the reduced form equations and determine which of the preceding equations are identified.
(b) Which method will you use to estimate the parameters of the over identified equation and of the exactly identified equation? Justify your answer.
In the given Keynesian model, the structural form of income determination can be expressed as: C = C₀ + C₁Yₜ₋₁ I = I₀ + I₁Y Y = C + I + G Here, C represents consumption expenditure, I is investment expenditure, Y is national income, G is government expenditure, and G₁ and Yₜ₋₁ are assumed predetermined variables. To derive the reduced form equations, we express each endogenous variable solely in ________ _______ _____ _________ _____ ____ _____.
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Given the following model:
Where D₁=0 for the first 20 observations and D₁=1 for the remaining 30 observations. You are also told that var (u2i)=300.
(a) How would you interpret ẞ₁ and ẞ2?
(b) What are the mean values of the two groups?
Empirical Research.
Autocorrelation
Multicollinearity
Statistical function.
Explain with illustrations the various steps involved in econometric methodology. What are the consequences of omitting a relevant explanatory variable in a regression model?
One way ANOVA and two way ANOVA.