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Derive the koyck distributed lag model

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Reference no: EM13891752

(a) Derive the Koyck distributed lag model.

(b) What problems arise in the estimation of this model? (Hint for part a: Start with the general distributed lag model and assume that the weights decline geometrically, with Jc referring to a constant larger than 0 and smaller than 1; then lag the relationship by one period, multiply by Jc, and subtract it from the original relationship.)

Reference no: EM13891752

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