Scribd
Upload
16 views

Econometrics Individual Assignment

The document outlines an econometrics assignment focusing on the definition and importance of econometrics in economic analysis, particularly in agricultural economics. It covers topics such as the differences between economic and econometric models, common errors in model specification, the Ordinary Least Squares method, and the distinction between correlation and causation. Additionally, it includes practical exercises involving data analysis and interpretation of econometric models.

Uploaded by

getachewnardos486
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
16 views

Econometrics Individual Assignment

The document outlines an econometrics assignment focusing on the definition and importance of econometrics in economic analysis, particularly in agricultural economics. It covers topics such as the differences between economic and econometric models, common errors in model specification, the Ordinary Least Squares method, and the distinction between correlation and causation. Additionally, it includes practical exercises involving data analysis and interpretation of econometric models.

Uploaded by

getachewnardos486
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 1

Econometrics Individual Assignment

Submission date February 24, 2025

1. Define econometrics and explain its importance in economic analysis. Provide examples of how
econometric models are used in agricultural economics.

2. Differentiate between economic models and econometric models. Why is it necessary to introduce a
stochastic error term in econometric models?

3. What are the common errors in econometric model specification? Discuss the consequences of omitted
variable bias and incorrect functional form.

4. Discuss the Ordinary Least Squares (OLS) method as a fundamental estimation technique in
econometrics. What are the key assumptions of OLS?

5. Econometric models often identify correlation between variables, but correlation does not imply
causation. Explain this concept with examples from agricultural economics.

6. The following table provides data on the price of a commodity (X) and the quantity demanded (Y):

Price (X) Quantity Demanded (Y)


10 100
15 90
20 80
25 70
30 60

Calculate the correlation coefficient (r) between X and Y. Interpret your result.

6. Suppose you estimated the following econometric model for crop yield: Y=5+1.5X1+0.8X2+uWhere:
▪ Y = Crop Yield (tons per hectare)
▪ X1= Fertilizer (kg)
▪ X2 = Labor (hours)

Interpret the coefficients β1=1.5 and β2=0.8.

7. Rank Correlation (Spearman's Method)


o The table below shows ranks given by two evaluators on the performance of five agricultural
enterprises:

Enterprise Rank by Evaluator 1 Rank by Evaluator 2


A 3 4
B 1 2
C 4 3
D 5 5
E 2 1

Calculate Spearman’s rank correlation coefficient (r) and interpret the result.

You might also like