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Assignment for Introduction to Econometrics

Econometrics for accounting

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sisayt738
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4 views

Assignment for Introduction to Econometrics

Econometrics for accounting

Uploaded by

sisayt738
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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INFOLINK UNIVERSITY COLLEGE

Assignment for Introduction to Econometrics

Note: Deadline for submission 16/12/2014 E.C.


Maximum members in a group shouldn’t exceed 4 (students)
 Cheating or any attempt to do so, causes automatic cancellation of your total group
result and;
 Don’t forget to write group members Name, ID №, Section and Program.

1. List and explain at least 5 assumptions of classical linear regression model with hypothetical
examples
2. The following table gives data on the profitability of bank in terms of birr (Y), the number of
customers visits the bank per week (X1) and the amount of loan provided (X2). Compute the
partial correlation coefficient between the profitability of bank and the number of customers
visit the bank keeping the effect of the amount of loan provided constant.
Data on yield of corn, fertilizer and insecticides used
Year 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980
Y 40 44 46 48 52 58 60 68 74 80
X1 6 10 12 14 16 18 22 24 26 32
X2 4 4 5 7 9 12 14 20 21 24

3. A market researcher asks experts to express their preference for ten different brands of T-shirt. Their
replies are shown in the following table.

Brands of T-shirt A B C D E F G H I J
Customer A 10 4 2 8 1 9 6 3 5 7
Customer B 8 3 5 9 1 10 7 2 4 6
i) Calculate for the rank correlation coefficient and determine the type of association between the
preferences of the two sampled customers?
ii) Interpret the result?
4. Briefly explain the concept of co-integration in time series data analysis?
5. The simplest form of economic relationships between two variables X and Y can be
represented by: Yi = 0 + 1Xi + Ui ; where 0 and 1 are regression parameters and U is
stochastic disturbance term. What are the reasons for the disturbance term (U) in the model?
6. The following data refers to the demand for money (M) and the rate of interest (R) in for eight
different economics:
M (In billions) 56 50 46 30 20 35 37 61
R% 6.3 4.6 5.1 7.3 8.9 5.3 6.7 3.5

A. Assuming a relationship
M=α+βR+U i , obtain the OLS estimators of α and β

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INFOLINK UNIVERSITY COLLEGE
Assignment for Introduction to Econometrics
B. Calculate the coefficient of determination for the data and interpret its value
C. If in a 9th economy the rate of interest is R=8.1, predict the demand for money(M) in this
economy.
7. The following results have been obtained from a simple of 11 observations on the values of sales (Y)
of a firm and the corresponding prices (X).
X̄=519 .18
Ȳ =217 . 82
∑ X 2i =3 ,134 ,543
∑ X i Y i=1 , 296 , 836
∑ Y 2i =539 , 512
i) Estimate the regression line of sale on price and interpret the results
ii) What is the part of the variation in sales which is not explained by the regression line?
iii) Estimate the price elasticity of sales.
8. The following table includes the GNP(X) and the demand for food (Y) for a country over ten years
period.
year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989
Y 6 7 8 10 8 9 10 9 11 10
X 50 52 55 59 57 58 62 65 68 70
a. Estimate the food function
b. Compute the coefficient of determination and find the explained and unexplained variation in
the food expenditure.
c. Compute the standard error of the regression coefficients and conduct test of significance at
the 5% level of significance.

9. A sample of 20 observations corresponding to the regression model


Y i =α+ βX i +U i gave the
following data.

∑ Y i=21 . 9 ∑ ( Y i −Y )2 =86 . 9
∑ X i=186 . 2 ∑ ( X i −X ) 2=215 . 4
∑ ( X i −X )( Y i −Y ) =106 . 4
a. Estimate α and β
b. Calculate the variance of our estimates

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INFOLINK UNIVERSITY COLLEGE
Assignment for Introduction to Econometrics
c. Estimate the conditional mean of Y corresponding to a value of X fixed at X=10.

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