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Econometrics Assign 2024

econometrics

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naol ejata
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22 views

Econometrics Assign 2024

econometrics

Uploaded by

naol ejata
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Ambo University Woliso Campus College of Business and Economics

Department of Economics
Econometrics for Finance Individual Assignment (15%) For 4th Year Evening AcFn Dep’t
students, 2017 / 20224
General Instructions:
√ The assignment should be done individually.
√ The assignment should be submitted on Final-Exam day.
√ Copy from each other makes the mark to be disqualified!
Questions: Show all necessary formulas and steps.
1. The following set of data was collected to determine the effects of sleep deprivation on
students' ability to solve problems. The amount of sleep deprivation varied, with 8, 12, 16, 20
and 24 hours without sleep. A total of ten subjects participated in the study. A set of simple
addition problems was administered to each subject after his or her sleep deprivation period,
and the number of errors recorded. These results were obtained:

Number of errors(Yi) 8 6 6 10 8 14 14 12 16 12
Hours without sleep(Xi) 8 8 12 12 16 16 20 20 24 24

a) Determine the OLS regression line


b) Determine the coefficient of determination (R2)
c) Test at 95% confidence level whether sleep deprivation has a significant effect on
students’ ability to solve problems
d) If hours without sleep is Xi =18, predict the number of errors.
2. Assume the following hypothetical weekly data on Y (Demand for a normal good) and X (its
price) are obtained from a certain market
Yt 1 3 5 6 5 6 4 7 8 7 9 9 9 8 7
Xt 7 6 5 4 4 4 4 3 3 4 2 2 1 2 1

The relationship between Y and X is expressed as

Yt   0  1 X t  et

Where, t is time representing weeks in which the data are collected

a) State the assumptions of the classical linear regression model to obtain each desirable
properties of OLS slope of two-variable model.
b) Assuming the model satisfies all the assumptions of the classical linear regression
model estimate the parameters, their standard errors, and goodness of fit.

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c) Calculate the average price elasticity of demand.
  
d) Test the statistical significance of the parameter estimates,  0 and  1 (H0:  i = 0) at 1
percent level of significance
e) Construct a 95% confidence interval for the true slope of the demand function
3. The following table contains observations on the quantity demanded (Y) of a certain
commodity, its price (X1) and consumers’ income (X2).

Quantity Demanded (Y) 100 75 80 70 50 65 90 100 110 60


Price (X1) 5 7 6 6 8 7 5 4 3 9
Income (X2) 1000 600 1200 500 300 400 1300 1100 1300 300

Assuming the relationship 𝑌𝑖 = 𝛽0 + 𝛽1 𝑋1𝑖 + 𝛽2 𝑋2𝑖 + 𝑈𝑖

a) Estimate the parameters by OLS


b) Compute the coefficient of multiple determination and interpret the result
 
c) Find the variance of  1 and  2 (and also their standard errors)
d) Compute the coefficient of determination and adjusted coefficient of determination and interpret
it
e) Test individual significance of slope parameter estimates at 5% level
f) Test overall significance of the model
4. The following table shows the levels of output (Y), labour in put (X1) and capital input (X2) of 12
firms measured in arbitrary units.

X2=110  X21 =980 YX1=40,834


X1=647 X12=34,843 YX2=6,7100
Y=757 Y2=48,143 X1X2=5,783
a) Estimate the output function Y=bo+b1X1+b2X2+U
b) What is the economic meaning of the coefficients
c) Compute the standard errors of the coefficients
d) Run tests of significance of the coefficients
e) Compute the coefficient of multiple determination and interpret it
f) Conduct the overall significance test and interpret your result.

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