What is the object-the model in econometrics

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Reference no: EM131547940

1. What is the object, the model in econometrics? The klein's Econometric model. Write the initial form of the model. Comment how to apply principle of specifications of econometrics model and postulates of the Gauss-Markov Theorem. Transform the initial form of the model to reduced form.

2. The normal equations for the regression coefficients formulas for estimates b₁ and b₂.

3. The output below gives the result of regressing FDHO, annual household expenditure on food consumed at home, on EXP, total annual household expenditure, both measured in dollars, using the Consumer Expenditure Survey. Give an interpretation of the coefficients. Write a specification of the Econometric Model. Which of the model coefficient is significant? Explain. Give an interpretation of R² and F-test result.

Source	SS	df	NS		Number of obs = 868
Model	911005795	1	911005795		F( 1, 866_ = 360.37
Residual	2.07E+09	866	2395045.39		Prob > e = 0.000
Total	2.99E+09	867	3443039.33		R-squared = 0.3052
					Adj R-squared = 0.3044
					Root MSE = 1547.6
FDHO	Coef.	Std.Err.	t	P>\|t\|		95% conf. Interval
EXP	0.0527204	0.0027032	19.8	0		0.0474149	0.058026
_cons	1922.938	96.30698	19.53	0		1733.323	2112.334

Reference no: EM131547940

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