PS7--Answers

# PS7--Answers - Econ 141 Problem Set 7 Answers Fall 2007 Due...

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Unformatted text preview: Econ 141: Problem Set 7: Answers Fall 2007 Due Monday, December 10th in Class This problem set is due the last day of class. I am also posting a pdf scan of these problems on b-space for those of you with different editions of the book. Because I cannot give it back to you in class or section, I will randomly select 10 of the problem sets to grade on the usual scale, and the rest will just be given credit as “completed” as long as they are turned in. Therefore, it will be very important for you to read through the answers as you prepare for the final. I will post the problem sets on the door of 608-1 for those of you who would like to pick up your problem set to study. Good luck! 1. Wooldridge C11.6 i. proc reg data=inven; model cinven=cgdp; run; Results: (standard errors in parentheses) Δ ˆ invent t = 2 . 59(3 . 64) + 0 . 152(0 . 023)Δ GDP t R 2 = 0 . 554 , n = 36 ˆ β 1 has a t-statistic of 6.49, so it is statistically different than 0. A one billion dollar increase in GDP leads to a \$ 152 million increase in inventories. This does not seem unrea- sonable. ii. proc reg data=inven; model cinven=cgdp r3; run; Results: (standard errors in parentheses) 1 Δ ˆ invent t = 3 . 00(3 . 69) + 0 . 159(0 . 025)Δ GDP t- . 895(1 . 101) r 3 t R 2 = 0 . 562 , n = 36 The sign of ˆ β 2 is negative, as predicted by economic theory, and it seems practically large:...
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PS7--Answers - Econ 141 Problem Set 7 Answers Fall 2007 Due...

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