Lab Assignment 14

Lab Assignment 14 - Lab Assignment 14 1. The demand...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Lab Assignment 14 1. The demand function for wine is Q = a + a 1 Pw + a 2 Pb + a 3 Y + a 4 A + u, and the supply function for wine is Q = b + b 1 Pw + b 2 S + v, where all variables are in logarithm forms. Identify the endogenous and exogenous variables. Determine the identification of each equation by the order condition. Endogenous variables : Q and Pw Exogenous variables : Pb, Y, A, and S Demand function : just identified ( the number of exogenous variables omitted from the equation is equal to the number of endogenous variables on right hand side ) Supply function : Over identified ( the number of exogenous variables omitted from the equation is greater than the number of endogenous variables on the right hand side ) 2. Estimate the demand and supply by OLS and observe simultaneity bias. Submit the results. The SAS System 12:30 Thursday, April 15, 2010 1 The REG Procedure Model: demand Dependent Variable: l_q Number of Observations Read 20 Number of Observations Used 20 Analysis of Variance Sum of Mean Source DF Squares Square F Value Pr > F Model 4 7.72520 1.93130 160.70 <.0001 Error 15 0.18027 0.01202 Corrected Total 19 7.90547 Root MSE 0.10963 R-Square 0.9772 Dependent Mean 0.87271 Adj R-Sq 0.9711 Coeff Var 12.56161 Parameter Estimates Parameter Standard Variable DF Estimate Error t Value Pr > |t| Intercept 1 -23.65122 3.91278 -6.04 <.0001 l_pw 1 1.15826 0.28983 4.00 0.0012 l_pb 1 -0.27483 0.60766 -0.45 0.6575 l_y 1 3.21206 0.71400 4.50 0.0004 l_a 1 -0.60299 0.44974 -1.34 0.2000 The SAS System 12:30 Thursday, April 15, 2010 2 The REG Procedure Model: supply Dependent Variable: l_q Number of Observations Read 20 Number of Observations Used 20 Analysis of Variance Sum of Mean Source DF Squares Square F Value Pr > F Model 2 7.61493 3.80746 222.78 <.0001 Error 17 0.29054 0.01709 Corrected Total 19 7.90547 Root MSE 0.13073 R-Square 0.9632 Dependent Mean 0.87271 Adj R-Sq 0.9589 Coeff Var 14.97986 Parameter Estimates Parameter Standard Variable DF Estimate Error t Value Pr > |t| Intercept 1 -15.56708 0.84802 -18.36 <.0001 l_pw 1 2.14495 0.23855 8.99 <.0001 l_s 1 1.38255 0.15451 8.95 <.0001 In the demand function, the coefficient of Pw should be negative, but the result shows positive sign : simultaneity bias.simultaneity bias....
View Full Document

Page1 / 8

Lab Assignment 14 - Lab Assignment 14 1. The demand...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online