Based on the annual data for Malaysian manufacturing firm, the following regression results were obtained: Regression...

 

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Based on the annual data for Malaysian manufacturing firm, the following regression results were obtained: Regression (1) Regression (2) i) In Y, = 1.51-0.36 In K,+ 0.54 In L, (0.457) p-value (0.871) (0.434) ii) (1), In (0.045) (0.035) R = 0.92 where Y= real output, K= quantity of capital input, L= quantity of labor input. = 0.82 +0.24 In p-value: R=0.95 Consider the following information: In K, -0.9852-0.6471 In L, r = 0.937 Using the above information and with the utilization of an appropriate procedure, determine the problem that exists in estimation. Discuss two (2) consequences when the above problem exists. Can the problem that exists in regression 1 be solved by estimating regression 2? Why? Based on the annual data for Malaysian manufacturing firm, the following regression results were obtained: Regression (1) Regression (2) i) In Y, = 1.51-0.36 In K,+ 0.54 In L, (0.457) p-value (0.871) (0.434) ii) (1), In (0.045) (0.035) R = 0.92 where Y= real output, K= quantity of capital input, L= quantity of labor input. = 0.82 +0.24 In p-value: R=0.95 Consider the following information: In K, -0.9852-0.6471 In L, r = 0.937 Using the above information and with the utilization of an appropriate procedure, determine the problem that exists in estimation. Discuss two (2) consequences when the above problem exists. Can the problem that exists in regression 1 be solved by estimating regression 2? Why?

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