You start your econometric analysis by estimating the following model based on quarterly data In Yt...

  

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You start your econometric analysis by estimating the following model based on quarterly data In Yt = B1 D1t + B2D2t + B3D3t+ B4D4t + yt + 8Z₁ + & t t = 1,..., T, where In Yt represents the natural logarithm of the quarterly U.S. (nominal) dollar gasoline sales, Z₁ is another macroeconomic variable, t is a time trend, and Djt, for j = 1,...,4, are quarter-specific dummy variables. a) Explain what quarter-specific dummy variables are. b) How are these dummy variables defined? c) Write down the regressor matrix X for the first 6 observations and define the overall parameter-vector corresponding to X. 5 marks 5 marks 7 marks d) Now you decide to introduce a constant in your regression model. i) Write down the new regression equation. What do you have to take into account? ii) What is the interpretation of the coefficients on the quarterly dummies now?ctivate Windows iii) How do you interpret the coefficient on t? Go to Settings to activat 9 marks You start your econometric analysis by estimating the following model based on quarterly data In Yt = B1 D1t + B2D2t + B3D3t+ B4D4t + yt + 8Z₁ + & t t = 1,..., T, where In Yt represents the natural logarithm of the quarterly U.S. (nominal) dollar gasoline sales, Z₁ is another macroeconomic variable, t is a time trend, and Djt, for j = 1,...,4, are quarter-specific dummy variables. a) Explain what quarter-specific dummy variables are. b) How are these dummy variables defined? c) Write down the regressor matrix X for the first 6 observations and define the overall parameter-vector corresponding to X. 5 marks 5 marks 7 marks d) Now you decide to introduce a constant in your regression model. i) Write down the new regression equation. What do you have to take into account? ii) What is the interpretation of the coefficients on the quarterly dummies now?ctivate Windows iii) How do you interpret the coefficient on t? Go to Settings to activat 9 marks

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a Quarterspecific dummy variables are variables used in regression analysis to capture the effects o... View the full answer