Econometrics – Cheap Research Essays

Question 1

Foodexp.xls gives data on expenditure on food and total expenditure measured in $, for a
sample of 55 households in U SA for a recent period. Using this data, perform the following
tasks (using EVIEWS)

(a) Import these data into an EVIEWS work file. Plot the data on food expenditure and total
expenditure, and sketch a regression line through the scatter plots.
( 20 marks)

(b) Regress food expenditure on an intercept and total expenditure. Comment on the R
square and the adjusted R square of this regression.
(20 marks)

(c) Comment on the F statistic of this regression as well as the t ratio for the significance of
the coefficient of total expenditure.
(20 marks)

(d) Create the logarithmic transformation of the two variables (food expenditure and total
expenditure) (call the resulting variable lnfood and lntotal respectively).Graph lnfood and
lntotal together and comment on the graph.
(20 marks)

(e) Regress lnfood on intercept and lntotal . Test whether the coefficient of lntotal is 1 using a
t test.

(20 marks)

You m ust provide EVIEWS output incorporated in your MS-Word document and fully explain
your actions and findings by commenting on the provided EVIEWS output directly.

Question 2

Consider the following regression results (estimated standard errors in parentheses) based
on data from a local cinema obtained at a monthly frequency over a two year period (n=24).

75. 0
) 10. 0( ) 16. 0( ) 03. 1(
ln 30. 0 ln 76. 0 54. 1
ˆ
ln
2
3 2

  
R
X X Y
t t t

where Yt
= quantity of ‘hot- dogs’ demanded;
X2t
= price of ‘hot- dogs’;
X3t
=price of nachos;
R
2
=the coefficient of determination; and
ln = the natural logarithm of a variable.