Consider the following estimated equation: Ct = 18.5-0.07P, +0.93YDt-0.74D1t - 1.3D2t - 1.3Dst t where: C...

    

Transcribed Image Text:

Consider the following estimated equation: Ct = 18.5-0.07P, +0.93YDt-0.74D1t - 1.3D2t - 1.3Dst t where: C per-capita pounds of pork consumed in the United States in quarter otherwise otherwise I P= the price of a hundred pounds of pork (in dollars) in quarter t YD = per capita disposable income (in dollars) in quarter t D= dummy equal to 1 in the first quarter (Jan-Mar.) of the year and 0 Da dummy equal to 1 in the second quarter of the year and 0 D = dummy equal to 1 in the third quarter of the year and 0 otherwise (a) What is the meaning of the estimated coefficients of YD, and D (b) Specify expected signs for each of the coefficients and explain your reasoning in 1 line per coefficient. (c) Suppose we changed the definition of Dat so that it was equal to 1 in the fourth quarter and 0 otherwise and re-estimated the equation with all the other variables junchanged. 1. Which of the estimated coefficients would change? 2. Would your answer to part (b) above change? Explain your answer. Consider the following estimated equation: Ct = 18.5-0.07P, +0.93YDt-0.74D1t - 1.3D2t - 1.3Dst t where: C per-capita pounds of pork consumed in the United States in quarter otherwise otherwise I P= the price of a hundred pounds of pork (in dollars) in quarter t YD = per capita disposable income (in dollars) in quarter t D= dummy equal to 1 in the first quarter (Jan-Mar.) of the year and 0 Da dummy equal to 1 in the second quarter of the year and 0 D = dummy equal to 1 in the third quarter of the year and 0 otherwise (a) What is the meaning of the estimated coefficients of YD, and D (b) Specify expected signs for each of the coefficients and explain your reasoning in 1 line per coefficient. (c) Suppose we changed the definition of Dat so that it was equal to 1 in the fourth quarter and 0 otherwise and re-estimated the equation with all the other variables junchanged. 1. Which of the estimated coefficients would change? 2. Would your answer to part (b) above change? Explain your answer.

Answer rating: 100% (QA)

Answer a The estimated coefficient of YDt represents the effect of per capita disposable income on p... View the full answer