EBQ2074

Class Exercise:

1. Transfer the data in Excel file into Eview.

2. Transform the data into logarithm form.

3. Using Y, X1, X2, X3 and X4, perform the following regression:

a) Regress Y on X1, X2, X3 and X4.
b) Regress LY on LX1, LX2, LX3 and LX4.
c) Regress LY on X1, X2, X3 and X4
d) Regress Y on LX1, LX2, LX3 and LX4

4. Decide which of the functional form is preferable based on the coefficient of

variation approach.

5. Assuming using double-log functional form, perform the following diagnostic

tests:
a) Normality test
b) Serial correlation test
c) Heteroscedasticity test
d) CUSUM sum of square test
e) Variance Inflation Factor
EBQ2074

Summary of Results

Regression Results
Coefficients Standard errors
X1
X2
C
Notes: *** denotes 1% significance level, ** denotes 5% significance level and * denotes 10%
significance level.

Diagnostic Results
Coefficients Probability Decision Conclusion
Normality Test
Serial Correlation Test
Heteroscedasticity
Test

Variance Inflation Factor:

CUSUM Squares test: