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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.
State the term National income statistics National income statistics underestimate the true level of economic activity, and as people's living standards, because the non-moneti
Consider the following demand schedule. Does it apply to a perfectly competitive firm? Compute marginal and average revenue Price Quantity Price Quantity $95 2 $55 5 $88 3 $40 6 $
Do we get paid nominal or real wage?
Stan Garner resides in Illinois and promotes boxing matches for Super sports, INC. an Illinois corporation. Garner created the connect of "ages" promotion- a three fight series of
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Oil price shocks lead to large adverse supply shocks in the macroeconomy, infer Dornbusch et al (2008) who define an adverse supply shock as; ‘one that shifts the aggregate supply
Instructions For the following 10 questions, consider an economy which is initially in equilibrium without a tax, with P* of $90 and Q* of 10. Later, a tax is put on the market
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