Consider the following equation for a country's per capita consumption of chicken (standard errors in parenthesis):...

 

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Consider the following equation for a country's per capita consumption of chicken (standard errors in parenthesis): CHIC=-152.4 + 50.2lnYD, -0.68PCHICK, +0.66PFIS-7.2D (8.2) (0.26) (0.24) R = 0.74 N=33 DW=0.84 (2.2) Where: CHIC, the annual per capita kilograms (KGS) of chicken consumed in the country InYD, the log of per capita disposable real income in the country in year t PCHICK = average annual real wholesale price of chicken in year t (in rand per KG) PFIS = average annual real wholesale price of fish in year t (in rand per KG) D = a dummy variable equal to 1 for years in which there was a bird flu health scare, 0 otherwise (a) Test for the significance of individual coefficients at the 5% level of significance. Clearly state the appropriate null and alternative hypothesis, t-values and decisions. (b) Test for serial correlation using the Durbin Watson Test at the 5-percent level. (10) (5) (c) Are there any other econometric problems in this model? How would you improve this model? (5) Consider the following equation for a country's per capita consumption of chicken (standard errors in parenthesis): CHIC=-152.4 + 50.2lnYD, -0.68PCHICK, +0.66PFIS-7.2D (8.2) (0.26) (0.24) R = 0.74 N=33 DW=0.84 (2.2) Where: CHIC, the annual per capita kilograms (KGS) of chicken consumed in the country InYD, the log of per capita disposable real income in the country in year t PCHICK = average annual real wholesale price of chicken in year t (in rand per KG) PFIS = average annual real wholesale price of fish in year t (in rand per KG) D = a dummy variable equal to 1 for years in which there was a bird flu health scare, 0 otherwise (a) Test for the significance of individual coefficients at the 5% level of significance. Clearly state the appropriate null and alternative hypothesis, t-values and decisions. (b) Test for serial correlation using the Durbin Watson Test at the 5-percent level. (10) (5) (c) Are there any other econometric problems in this model? How would you improve this model? (5)