ECON301_Handout_09_1213_02

# Example to illustrate the growth model a23 consider

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Example To illustrate the growth model (A2.3), consider the regression model as follows: ln 7.7890 0.00743 t EXS t 2 R =0.9894 (A2.4) t-stat (3387.619) (44.2826) where EXS stands for expenditure on services, and t =1993:Q1 to 1998:Q3. The interpretation of Eq. (A2.4) is that over the quarterly period 1993:1 to 1998:3, expenditure on services increased at the (quarterly) rate of 0.743 percent (quarterly rate of growth). 6 t t t t t 1 tt Y lnY Y Y Y 1 = YY d dd dt dt dt .

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ECON 301 - Introduction to Econometrics I April, 2013 METU - Department of Economics Instructor: Dr. Ozan ERUYGUR e-mail: [email protected] Lecture Notes 23 For our illustrative example, the estimated slope coefficient is 0.00743. Therefore, 0.00743 1 re  = 0.00746 or 0.746 percent. Thus, in the illustrative example, the compound rate of growth on expenditure on services was about 0.746 percent per quarter, which is slightly higher than the instantaneous growth rate of 0.743 percent. This is of course due to the compounding effect.
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Example To illustrate the growth model A23 consider the...

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