Economic Rough Answers

212ECN SUMMER 2010

Coventry University

Faculty of Business, Environment and Society 212ECN frugal & Financial Modelling

INSTRUCTIONS TO CANDIDATES Time allowed 2 hours You MUST state both questions in portion A and then all Question 3 or 4 in part B

For this examination you will be supplied with the following: Statistical tables

You may take this exam paper away at the termination of the examination: please keep it in a safe place for future reference

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Part A 1. Question 1

You ar presented with the following results from a number of regressions. The following questions refer to the Tables I and II. The variables are Housing Expenditure, Disposable Income (DY) & Retail Price ability (RPI)

Table I OLS, using observations 1948-1990 (T = 43) Dependent variable: living accommodations Coefficient Std. Error t-ratio 47893.3 2233.06 21.4474 0.11569 0.00439485 26.3240 103908.4 8.08e+08 0.944138 692.9524 -421.1264 849.7753 0.861024 p-value regression is better than just a unalterable (15 marks) ii) The residuals have a skewness of 1.1384 and an excess kurtosis of 2.1531. Are they commonly distributed? Detail the test statistic for this.



H0: ordinarily distributed ( ) H1: not normally distributed ( ) 2 2 JB = 188/6*(1.1184 + 2.1531 /4) = 76.92 > 5.99 = ?2(2)5% -> reject H0 -> residuals are not normally distributed (5 marks) iii) What approach to the regression might you use to deal with the autocorrelation exhibited by the model? develop the procedure fully. Lecture notes (20 marks)

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iv) What supplementary tests would you paint a picture to perform in light of results of the regression above? Explain the tests fully and any corrective measures you might take. t, heteroskedasticity, structural break, multicollinearity, RESET, etc. (30 marks) v) Explain the economic significance of the coefficients. Are they as you would express from economic theory? Fisher hypothesis;...If you want to pound a full essay, order it on our website: Orderessay



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