Estimate classical linear regression model, Microeconomics

Assignment Help:

The following model shows the consumption function given:

Ct = ADtβ2

Where A and β2 are unknown constants and D is disposable income.
(a) Show how by taking logarithms of the above equation, a linear equation may be obtained.

(b) interpret β.  The estimated model is given by:

  log Ct = 55.78 + 0.764 log Dt 

R2 = 0.89, values in brackets represent t-ratios.

(c ) Interpret the above results

(d) What the reasons behind the existence of multicollinearity and comment on the measures that can be used to deal with such a problem?

(e) What are the assumptions underlying the Classical Linear Regression Model?


Related Discussions:- Estimate classical linear regression model

Find out market equilibrium price and quantity , Question Suppose you w...

Question Suppose you work for the state government of California. Due to the heavy traffic jam on I-880, the state has decided to decide to construct a new highway. To fund a p

Example on lotteries in the united states, Most lotteries in the United Sta...

Most lotteries in the United States pay their winnings over time. For illustration, a million-dollar winner will receive $100,000 initially and the rest in equal installments over

Social welfare function, 2 i) Explain what are the key assumptions by the w...

2 i) Explain what are the key assumptions by the welfarist approach. ii) Define and discuss the properties of a Generalized Utilitarian social welfare function and represent it

Economics question im stuck with, The prevention of major swings in economi...

The prevention of major swings in economic activity can be handled most easily by the: A. Household sector B. business sector C. financial sector D. government sector why?

Significance of stagnation in supply and demand calculus, Significance of S...

Significance of Stagnation in Supply and Demand Calculus Stagnation refers to failures of students in a grade/class or grade repetition. The objective of a course is to make c

Pooling, pooling in insurance

pooling in insurance

Macro , Suppose that nominal interest income is taxed at a rate of 30%. Cal...

Suppose that nominal interest income is taxed at a rate of 30%. Calculate the before-tax real interest rate and the after-tax real interest rate if the nominal interest rate is 6%

Consumer choice - revealed preferences, Consumer Choice   * Decision mak...

Consumer Choice   * Decision making & Public Policy - Selecting from a non matching and matching grant to fund police expenditures

Elasticity, 1. What are the uses of elasticity to the public sector and pri...

1. What are the uses of elasticity to the public sector and private sector? (20 marks)

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd