Modelling with Econometrics: Challenges and Solutions ECM3MEC

Task 1
 Download and describe the data. Calculate, using Eviews, the mean, median, standard deviation, maximum and minimum for each variable and comment. [2 marks]

 Write out the result in an equation form and provide economic meanings of the estimated slope coefficients. [2 marks]

 Statistically test for the significance of individual slope coefficients ß4 and ß5. (You may use either one-tailed or two-tailed test, but you should justify your choice giving economic reasons). [1 mark]

 Test the hypothesis that ß3 + ß4 + ß5 = 1 using the F-test (Wald test). Explain the economic meaning of this hypothesis. [1 mark]

Task 2

 It is claimed that the main contributors to the total cost in this industry is the output level and fuel costs, while the capital costs and wage costs have negligible effect. Test this claim by F-test. [2 mark]

 Conduct the RESET test for the regression. Is there any evidence of specification error? [1 Mark]

 Test for the normality of error term in the regression using the appropriate test. [1 Mark]

 Plot the absolute values of residuals from equation (2) against log(Qi) (squared residuals on the y-axis). Comment on the main features in the variability of the total cost in relation to the problem of heteroskedasticity, giving economic interpretations. [2 marks]

   Combining the estimation and inferential results obtained so far, discuss the main econometric problems associated with the model. You may suggest possible solutions and, if necessary, conduct additional econometrics analyses to further improve the regression. [3 marks]
TC   Q   Wage   Capital   Fuel
0.082   2   2.09   183   17.9
0.661   3   2.05   174   35.1
0.99   4   2.05   171   35.1
0.315   4   1.83   166   32.2
0.197   5   2.12   233   28.6
0.098   9   2.12   195   28.6
0.949   11   1.98   206   35.5
0.675   13   2.05   150   35.1
0.525   13   2.19   155   29.1
0.501   22   1.72   188   15
1.194   25   2.09   170   17.9
0.67   25   1.68   167   39.7
0.349   35   1.81   213   22.6
0.423   39   2.3   164   23.6
0.501   43   1.75   170   42.8
0.55   63   1.76   161   10.3
0.795   68   1.98   210   35.5
0.664   81   2.29   158   28.5
0.705   84   2.19   156   29.1
0.903   73   1.75   176   42.8
1.504   99   2.2   170   36.2
1.615   101   1.66   192   33.4
1.127   119   1.92   164   22.5
0.718   120   1.77   175   21.3
2.414   122   2.09   180   17.9
1.13   130   1.82   176   38.9
0.992   138   1.8   202   20.2
1.554   149   1.92   227   22.5
1.225   196   1.92   186   29.1
1.565   197   2.19   183   29.1
1.936   209   1.92   169   22.5
3.154   214   1.52   168   27.5
2.599   220   1.92   164   22.5
3.298   234   2.2   164   36.2
2.441   235   2.11   170   24.4
2.031   253   1.92   158   22.5
4.666   279   2.05   177   35.1
1.834   290   1.66   195   33.4
2.072   290   1.8   176   20.2
2.039   295   1.77   188   21.3
3.398   299   1.7   187   26.9
3.083   324   2.05   152   35.1
2.344   333   2.19   157   29.1
2.382   338   1.85   163   24.6
2.657   353   2.19   143   29.1
1.705   353   2.13   167   10.7
3.23   416   1.54   217   26.2
5.049   420   1.52   144   27.5
3.814   456   2.09   178   30
4.58   484   1.75   176   42.8
4.358   516   2.3   167   23.6
4.714   550   2.05   158   35.1
4.357   563   2.32   162   31.9
3.919   566   2.31   198   33.5
3.442   592   1.92   164   22.5
4.898   671   2.05   164   35.1
3.584   696   1.76   161   10.3
5.535   719   1.7   174   26.9
4.406   742   2.04   157   20.7
4.289   795   2.24   185   26.5
6.731   800   1.7   157   26.9
6.895   808   1.68   203   39.7
5.112   811   2.29   178   28.5
5.141   855   2   183   34.3
5.72   860   2.31   168   33.5
4.691   909   1.45   196   17.6
6.832   913   1.7   166   26.9
4.813   924   1.76   172   10.3
6.754   984   1.7   158   26.9
5.127   991   2.09   174   30
6.388   1000   1.55   225   28.2
4.509   1098   2.11   168   24.4
7.185   1109   2.05   177   35.1
6.8   1118   2.3   161   23.6
7.743   1122   2.19   162   29.1
7.968   1137   2.04   158   20.7
8.858   1156   2.31   176   33.5
8.588   1166   1.7   183   26.9
6.449   1170   2.05   166   35.1
8.488   1215   2.19   164   29.1
8.877   1279   2   207   34.3
10.274   1291   2.32   175   31.9
6.024   1290   1.55   225   28.2
8.258   1331   2.13   178   30
13.376   1373   2.2   157   36.2
10.69   1420   2.2   138   36.2
8.308   1474   1.85   163   24.6
6.082   1497   1.76   168   10.3
9.284   1545   1.8   158   20.2
10.879   1649   2.32   177   31.9
8.477   1668   1.8   170   20.2
6.877   1782   2.13   183   10.7
15.106   1831   1.98   162   35.5
8.031   1833   1.76   177   10.3
8.082   1838   1.45   196   17.6
10.866   1787   2.24   164   26.5
8.596   1918   1.69   158   12.9
8.673   1930   1.81   157   22.6
15.437   2028   2.11   163   24.4
8.211   2057   1.76   161   10.3
11.982   2084   1.77   156   21.3
16.674   2226   2   217   34.3
12.62   2304   2.3   161   23.6
12.905   2341   2.04   183   20.7
11.615   2353   1.69   167   12.9
9.321   2367   1.76   161   10.3
12.962   2451   2.04   163   20.7
16.932   2457   2.2   170   36.2
9.648   2507   1.76   174   10.3
18.35   2530   2.31   197   33.5
17.333   2576   1.92   162   22.5
12.015   2607   1.76   155   10.3
11.32   2870   1.76   167   10.3
22.337   2993   2.31   176   33.5
19.035   3202   2.3   170   23.6
12.205   3286   1.61   183   17.8
17.078   3312   1.68   190   28.8
25.528   3498   2.09   170   30
24.021   3538   2.09   176   30
32.197   3794   2.05   159   35.1
26.652   3841   2.29   157   28.5
20.164   4014   2.11   161   24.4
14.132   4217   1.53   172   18.1
21.41   4305   2.11   203   24.4
23.244   4494   2.04   167   20.7
29.845   4764   2.19   195   29.1
32.318   5277   1.92   161   29.1
21.988   5283   2.04   159   20.7
35.229   5668   2.11   177   24.4
17.467   5681   1.76   157   10.3
22.828   5819   1.79   196   18.5
33.154   6000   2.11   183   24.4
32.228   6119   1.54   189   26.2
34.168   6136   1.92   160   22.5
40.594   7193   2.12   162   28.6
33.354   7886   1.61   178   17.8
64.542   8419   2.32   199   31.9
41.238   8642   2.24   182   26.5
47.993   8787   2.31   190   33.5
69.878   9484   2.11   165   24.4
44.894   9956   1.68   203   28.8
67.12   11477   2.24   151   26.5
73.05   11796   2.12   148   28.6
139.422   14359   2.31   212   33.5
119.939   16719   2.3   162   23.6

Place this order with us and get 18% discount now! to earn your discount enter this code: special18 If you need assistance chat with us now by clicking the live chat button.