ECON206_1011_01_ProblemSet_07

# ECON206_1011_01_ProblemSet_07 - Middle East Technical...

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ECON 206 1 Middle East Technical University 2010-2011 Fall Department of Economics ECON 206 Instructor: Ozan ERUYGUR Research Assistant: Pelin AKÇAGÜN PROBLEM SET 07 PROBLEM 1 Suppose a researcher wants to estimate the parameters in the simple population equation Y = β 0 + β 1 X + u The following data which were calculated from a sample of 10 observations are available. Σ Y = 580 Σ xy = -654 Σ X = 50 Σ y 2 = 7568 Σ XY = 2246 Σ x 2 = 60 Σ Y 2 = 41208 Σ X 2 = 310 a. Obtain least square estimates of β 0 and β 1 . b. Compute R 2 . Given an interpretation for the coefficients of determination. c. Test if the model must have an intercept term (take α = 0.05). d. Test if the slope coefficient is different from zero (take α = 0.05). e. Construct the 99 % confidence interval for β 1 . PROBLEM 2 Suppose you want to estimate the following export supply function for commodity Z : 01 tt t Ybb Xu =+ + Given the following information for 10 years: X =5, Y =6, X Y =353, 2 t X =304, 2 t Y =428, where, t Y = Quantity supplied for exports of commodity Z (mil. tons) t X = Export price (\$ per ton)

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ECON206_1011_01_ProblemSet_07 - Middle East Technical...

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