Economic theory Essay Example | Topics and Well Written Essays - 2000 words

Economic guess - Essay ExampleThis particular variable takes the mensurate of whiz if the year being considered is 1983 and zero, otherwise. Moreover, annual data for Belgian aggregates for forty years, which is from 1955 to 1994, was employ in the study.Statistical analysis of the time series data considered in this study is facilitated by the use of E-views. According to Judge (2003), E-views is a modern, powerful but intuitive econometrics software. It operates by manipulating objects such as data series and equations. With the computer package, the author mentions that the data series can also be viewed as a table of values or as points plotted on a graph.For the 40 time series observations provided, the ordinary least squares estimation procedure was used to estimate the parameters of the model with real per-capita consumption as the dependent variable. The models considered in the study depicting the family of the variables consumption, interest rate, per capita income and unemployment areBefore the final model (model 3) was arrived at, models 1 and 2 were both tested for various(a) assumptions. To determine if there is presence of first order autocorrelation, the Durbin-Watson test and the Breusch-Godfrey test were used. Ramseys RESET test, on the one hand was utilized to determine if non-linearity of the functional form. Normality of residuals was checked by way of graphs as come up as statistics provided by the Jarque-Bera test. The Whites test was used to examine the presence of heteroscedasticity in the data set. Finally, first-order ARCH make were also investigated. All tests of hypotheses were conducted using the 5% level of significance.A summary of the results of the verification of the assumptions (misspecification tests), estimated coefficients for the parameters of the model with the check t-ratios and the adjusted coefficient of determination are provided in table 1 below for the three models. A intelligence of the results obtain ed for the analysis of the time series data on consumption is also provided below.Table 1. Summary of the Results for the trio ModelsModel 1Model 2Model 3Intercept-0.101-0.033-0.020 t-statistic value-1.235-0.174-0.580LYJt1.0190.7560.822 t-statistic value95.8575.9578.477RIJt98.73435.77330.969 t-statistic value5.7593.0422.918UJt0.3100.065 t-statistic value0.3200.050LCJt-10.9040.767 t-statistic value7.9689.299LYJt-1-0.663-0.585 t-statistic value-5.368-6.012RIJt-1-23.756 t-statistic value-1.679UJt-1-0.084 t-statistic value-0.070Fit MeasuresAdjusted R20.9980.9990.999Standard ErrorF(23)0.0230.0120.0121.0610.380Misspecification