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Unformatted text preview: Econ 444 Elementary Econometrics Fall 2007 Homework Exercise Solution: 6 (ac) The solutions are computer files included as excel and word docu ments. (d) The results are identical. (e) log ( Q i ) = . 01 + 0 . 29 log ( L i ) + 0 . 34 log ( K i ) + 0 . 37 log ( Mi ) (0 . 02) (0 . 04) (0 . 06) (f) log ( Q i ) = 0 . 03 + 0 . 43 log ( L i ) + 0 . 57 log ( K i ) (0 . 00) (0 . 00) (g) The point estimates in Regression (1) suggest that if labor, capital, and materials inputs were all zero, output would be slightly negative. This makes sense because firms have fixed costs which are independent of output. Given a 1% increase in labor input, we expect a 0 . 3% increase in output. Given a 1% increase in capital, we expect output to increase by 0 . 34% increase in ouput. Lastly, we expect a 1% increase in material inputs to increase output by 0 . 34%. (h) The regression has 2000 1951 + 1 = 50 observations and it follows that there are 50 k 1 = 46 degrees of freedom. The .95 critical value for 401 = 46 degrees of freedom....
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This note was uploaded on 07/17/2008 for the course ECON 444 taught by Professor Ogaki during the Fall '07 term at Ohio State.
 Fall '07
 OGAKI
 Econometrics

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