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Econometrics Assignment MBA - 2

This document outlines an assignment for a graduate-level econometrics course. It includes 10 questions assessing students' understanding of [1] measures of central tendency and dispersion, econometric analysis methodology, and simple linear regression; [2] applying ordinary least squares estimation to example datasets; and [3] interpreting regression outputs and assessing model assumptions/goodness-of-fit. Students are asked to work through examples, interpret results, and explain key econometric concepts and tests.

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Teketel chemesa
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84 views

Econometrics Assignment MBA - 2

This document outlines an assignment for a graduate-level econometrics course. It includes 10 questions assessing students' understanding of [1] measures of central tendency and dispersion, econometric analysis methodology, and simple linear regression; [2] applying ordinary least squares estimation to example datasets; and [3] interpreting regression outputs and assessing model assumptions/goodness-of-fit. Students are asked to work through examples, interpret results, and explain key econometric concepts and tests.

Uploaded by

Teketel chemesa
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Grand College

Post graduate studies


Department : MBA Program
Course: Econometrics and software Application in Research(MBA 514)
Submission Deadline: June 15, 2023
Instructor: Berhanu G. (Ass.Professor)

Group Assignment-II

Part I: Give brief answers for the following questions.

1. List and discuss the measures of central tendency and measures of dispersion.
2. Discuss the steps (methodology) in econometric analysis and desirable properties of
econometrics
3. Based on the simple linear regression model given below answer the following questions.
ܻ = ߚ଴ + ߚଵ ܺ + ߝ
a. Write the dependent variable: -----------------------------------
b. Write the error term: -------------------------------------------------
c. Write the intercept: ----------------------------------------------------
d. Write the explanatory/independent variable: ----------------------------
e. Write the slope:----------------------------. How do you interpret it?
4. Consider the following model relating bank profitability (P), as measured by the amount
of profit earned in Birr per year, to amount of deposit mobilized in Birr (D);
Pi = β 1 + β 2 D i + u i
a) What kind of factors is contained in the error term? Are these factors likely to be
correlated with the level of deposit?
b) Why we need to include error(Ui) in the model?
c) Will a simple linear regression analysis of this type produces an unbiased estimate of
the effect of deposit on profit? Explain.
5. How do you know whether your estimated linear regression model is a good or not?
Explain.
6. List and explain the basic assumptions of classical linear regression model
7. What are the basic tests and remedies for violations of the following of OLS
assumptions;
a) Multicollinearity
b) Hetroscedasticity
c) Normality

1
d) Autocorrelation

Part II: Work out the following with necessary steps

1. The following data in the table refers to the price of financial asset in US $ (P) and
quantity of the asset supplied(S) for 8 observation years.

S 62 84 66 20 58 88 36 82
P 12 16 13 4 10 18 6 19

Required:
a. Assuming a linear relationship S = ߙ + βPi + u i ; then estimate the OLS estimators of α
and β and interpret the results
b. Calculate the coefficient of determination (R2 ) and interpret its value
c. Determine the residual sum of square (RSS) and interpret its value
d. If price( P) of the asset is US $ 28, predict the supply level of this asset
e. Conduct a test of significance at 5% level of significance for the estimates using Standard
error ( SE) and t-ratios and interpret the results

2. Assume that the sales in Birr (Y) in thousands of a company depends on two factors:
price(X1) in Birr and advertising expenditure in Birr (X2) and data on these variables is
given in the following table.
Observation Y X1 X2
1 40 52 53
2 40 50 53
3 41 46 50
4 46 44 64
5 52 42 70
6 59 35 68
7 53 36 59
8 61 38 73
9 55 40 59
10 64 42 76

Required:
a. Assuming a linear relationship Y = β0 + β1X1i +β2X2i + u i ; then estimate the OLS
estimators of β0, β1 and β2 and interpret the results
b. Compute variance of the estimates of β1 and β2
c. Calculate the coefficient of determination (R2 ) and interpret its value
d. Test the slope parameter estimators of β1 and β2 using t-test at 5% level of significance
and interpret the result
e. Test the overall significance of the model using F-test and interpret the result

2
8. Suppose that a researcher wants to identify factors that affect whether an investor can
decide to purchase a bond or Not in a given point of time ; and there might be
different explanatory variables that could be included in the model of this study . What
type of econometric model that the researcher is expected to employ to identify those
factors? Why?
9. Explain the difference and importance of binary choice and ordered choice econometric
models using examples.
10. The following table is the regression result of wage(Wage) of the manager in Birr as
dependent variable and education(educ), experience(exper), hours per week(hrswk),
Marital status(married) and Gender(female) as independent variables.

Source SS df MS Number of obs = 1000


F( 5, 994) = 61.31
Model 38789.2297 5 7757.84593 Prob > F = 0.0000
Residual 125776.198 994 126.535411 R-squared = 0.2357
Adj R-squared = 0.2319
Total 164565.428 999 164.730158 Root MSE = 11.249

wage Coef. Std. Err. t P>t [95% Conf. Interval]


educ 2.095431 .1360413 15.40 0.000 1.82847 2.362392
exper .1369361 .02849 4.81 0.000 .0810286 .1928436
hrswk .0898594 .0359265 2.50 0.013 .0193589 .16036
married 1.758186 .7403255 2.37 0.018 .3054061 3.210967
female -3.974889 .7470294 -5.32 0.000 -5.440825 -2.508953
_cons -14.49758 2.440117 -5.94 0.000 -19.28595 -9.709204
Soucre: stata software result

Required : Based on the the above result answer the following quesstions:

a) Which type of regression model is appropriate for this result?---------------------


b) Which variables affect the wage of the manager posively and negatively ?----------------
c) Which varibles are significant in the model? Why?----------------------------------
d) Interprete R-squared(R2)-------------------------------------
e) Which stastical result shows the overall significance of the model? Why?--------------------

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