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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.
n 2013, approximately 58 percent of the adult population (245 million) was employed, the lowest employment rate in 20 years. If the employment rate increased to the prerecession l
according to this example,how much value do each book contribute to the GDP? a) a forester chop down 100 trees and sell them @$100 to the paper and pulp factotry
A brewery produces two kinds of beer, stout and IPA . Each batch of stout sells for $60 per unit while each batch of IPA sells for $108. Both products require malt, hops, barley, f
What isn''t a component of the M1 money supply?
The estimated statistics from the VAR model are not able to be interpreted to solve the problem of this coursework due to reasons that are discussed in the next subchapter. Therefo
When is a balanced budget presented?
The cash flows (CF t ) associated with an investment are listed below (assume that each cash flow occurs at the beginning of each year): CF 0 = -200
From Tables 3A to 3F in the Appendix the results from VAR/Block Exogeneity Granger Causality Test are that the oil price variable does Granger cause both Inflation and interest rat
the suitability of utilising a policy of tariffs and quotas given the case of perfect competition.
Is it true that government revenues are increased because of lower tax rates? Ans) It is true to a point. The Laffer curve determines that revenues enhance as the tax rates rise
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