# (i) Add a linear time trend to equation (11.27). Is a time trend necessary in the first-difference equation? (ii) Drop...

## Question:

(ii) Drop the time trend and add the variables ww2 and pill to (11.27) (do not difference these dummy variables). Are these variables jointly significant at the 5% level?

(iii) Using the model from part (ii), estimate the LRP and obtain its standard error. Compare this to (10.19), where gfr and pe appeared in levels rather than in first differences.

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**Related Book For**

## Introductory Econometrics A Modern Approach

**ISBN:** 978-0324660548

4th edition

**Authors:** Jeffrey M. Wooldridge

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