Question: a. Using data from the data file toody 5 , estimate the following model. Comment on the results. [text { YIELD }_{t}=alpha_{1}+alpha_{2} t+beta_{1} text {
a. Using data from the data file toody 5 , estimate the following model. Comment on the results.
\[\text { YIELD }_{t}=\alpha_{1}+\alpha_{2} t+\beta_{1} \text { RAIN }_{t}+\beta_{2}\text{RAIN}_{t}^{2}+e_{t}\]
b. Plot the residuals from the model estimated in part (a) and check the residual correlogram. What do you observe?
c. Estimate the following model and comment on the results.
\[\text { YIELD }_{t}=\alpha_{1}+\alpha_{2} t+\alpha_{3} t^{2}+\beta_{1} \text { RAIN }_{t}+\beta_{2} R A I N_{t}^{2}+e_{t}\]
d. Plot the residuals from the model estimated in part (c) and check the residual correlogram. How do the properties of the residuals differ from those in part (b)?
e. Using a 5\% significance level, test whether YIELD, RAIN, and RAIN \({ }^{2}\) are trend stationary after subtracting out the quadratic trend.
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