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Firstly, it is imperative that I investigate the stochastic properties of each series considered in the model prior to estimating the effects of oil price shocks on macroeconomic activity. This is done by analysing the order of integration from using a unit root test. Specifically, in this project the Augmented Dicky-Fuller (ADF) test will be used.Asteriou & Hall (2011) write the three different types of ADF equations as;
Where Yt = each variable (GDP, Inflation, Interest rates, Exchange rates, Unemployment and Oil prices.)
The difference between each equation is the appearance of and respectively. These are deterministic elements, noted as the constant and trend respectively.
For this test, the hypotheses are stated as;
The null hypothesis, infers that a unit root exists, whereas the alternative hypothesis, infers that there is no root. Once this test has been passed, an appropriate lag length will need to be determined for the VAR model. If any variable does not pass this test and contains a unit root, then it will be invalid and will not be analysed in the further stages.
The price level is the monetary value of a good or service.
Consider two perfectly negatively correlated risky securities A and B. A has an expected rate of return of 12% and a standard deviation of 17%. B has an expected rate of return of
The following is the information from the national income accounts for a hypothetical country: GDP Rs. 6000.00 Gross Investment Rs. 800.00 Net Investment Rs. 200.00 Consumption Rs.
define business cycle
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U.S. employers have strongly opposed a corporatist agenda, under which employment relationships would be jointly governed by unions, employers, and government. This orientation has
In order to encourage you to take interests in the current affairs in business, and have more concerns about the real world problems (which is what economics is about), you are req
what is credit creation process
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