You are given the annual data in Table 8-5 for the United States for the period 1971
Fantastic news! We've Found the answer you've been seeking!
Question:
You are given the annual data in Table 8-5 for the United States for the period 1971 to 1986. Consider the following aggregate demand function for passenger cars:
InY i = B 1 + B 2 InX 2t + B 3 InX 3t + B 4 InX 4t + B 5 InX 5t + B 6 InX 6t + u t
where In = the natural log
a. What is the rationale for the introduction of both price indexes X 2 and X 3 ?
b. What might be the rationale for the introduction of the "employed civilian labor force" (X 6 ) in the demand function?
c. How would you interpret the various partial slope coefficients?
d. Obtain OLS estimates of the preceding model.
DEMAND FOR NEW PASSENGER CARS IN
THE UNITED STATES, 1971 TO 1986
Expert Answer:
a X 2 is a product specific price index whereas X 3 is the general price index It is possible that t... View the full answer
Related Book For 
Posted Date:
