Suppose we change the model in Exercise 20 8 as follows R t Icirc sup2 0 Icirc sup2 1 M t Icirc sup2 2 Y t Icirc sup2 3 Y t1 u 1t Y t Icirc plusmn 0 Icirc plusmn 1 R t u 2t a Find out if the system is identified b Using the data given in the following table, estimate the parameters of the identifie...

a By the order condition the interest rate equation is not identified and the ...

Suppose we change the model in Exercise 20.8 as follows: R t = Î² 0 + Î²

Question:

Suppose we change the model in Exercise 20.8 as follows:

R_t = Î²₀ + Î²₁M_t + Î²₂Y_t + Î²₃Y_tˆ’1 + u_1t

Y_t = Î±₀ + Î±₁R_t + u_2t

a. Find out if the system is identified.

b. Using the data given in the following table, estimate the parameters of the identified equation(s).

GDP (Y1) ТВ6 (Xз) Observation M2 (Y2) GPDI (X1) FEDEXP (X2) 3,771.9 3,898.6 4,105.0 4,341.5 4,319.6 4,311.2 4,540.9 4

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Basic Econometrics

ISBN: 978-0073375779

5th edition

Authors: Damodar N. Gujrati, Dawn C. Porter

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Question Posted: May 29, 2018 03:52 AM

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Suppose we change the model in Exercise 20.8 as follows: R t = Î² 0 + Î²

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a By the order condition the interest rate equation is not identified and the ...View the full answer

Basic Econometrics

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