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Problem Set 5
Econometrics I
Due 3/22/11
Resource Economics 702
1.
Consider the following model of the aggregate US production:
3
12
4
exp
t
u
tt
t
t
t
YA
K
L
E
M
;
where:
Y
t
is an index of total US output in year t;
K
t
is an index of capital input for year t;
L
t
is an index of labor input for year t;
E
t
is an index of energy input for year t; and
M
t
is an index of materials input for year t.
Data are on the course website and in the text (Table 9.10).
(2)
a.
Estimate the population parameters using OLS.
Interpret the estimates
for the population
parameters
123
4
,
,
, and
.
Do the estimates have the expected signs?
(1)
b.
Are the estimated parameters statistically significant
?
Explain briefly for each.
(2)
c. Theory suggests that US aggregate production may be characterized by
constant returns to
scale
. Derive the appropriate restriction for your empirical model that will be used as the null
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This note was uploaded on 12/08/2011 for the course ECON 702 taught by Professor Staff during the Spring '08 term at UMass (Amherst).
 Spring '08
 STAFF
 Econometrics

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