Consider the following data on quantity demanded (Y), price of the commodity (X1) & consumers income (X2) for the year 1985-1999 in the United States. (use SPSS or STATA)
Year
Y
X1
X2
1985
40
9
400
1986
45
8
500
1987
50
9
600
1988
55
8
700
1989
60
7
800
1990
70
6
900
1991
65
6
1000
1992
65
8
1100
1993
75
5
1200
1994
75
5
1300
1995
80
5
1400
1996
100
3
1500
1997
90
4
1600
1998
95
3
1700
1999
85
4
1800
Calculate the coefficient of parameters using OLS regression equation.
Write the estimated regression equation.
Compute the coefficient of determination (R2) and find the explained and unexplained variation in the quantity demand.
Interpret the results (regression coefficients) if it statistically significant.
Test for Multicollinearity with Variance Inflation Factor (VIF).
Test for Autocorrelation with Durbin-Watson and with 5 % level of significance.
The following table includes the GNP(X) and the demand for food (Y) for a country over ten years period.
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
Y
6
7
8
10
8
9
10
9
11
10
X
50
52
55
59
57
58
62
65
68
70
Estimate the food demand function
Compute the coefficient of determination and find the explained and unexplained variation in the food expenditure.
Compute the standard error of the regression coefficients and conduct test of significance at the 5% level of significance.
Prove Guass-Markov theorem (Properties of OLS estimators). Do only for the intercept since the coefficient is already proved in class.
