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  • Assignment 2 IFA

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    Shehzad Alum
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    This document outlines the key tasks for Assignment #2 which include: 1) explaining econometric methodology and defining economic data sets, 2) describing the assumptions of the Ordinary Least Squares (OLS) method, 3) writing a note on the variances and standard errors of OLS estimators, 4) explaining regression model functional forms, 5) linearizing and estimating the parameters of a transcendental production function using logarithms and data from Table 2.1, and 6) fitting and interpreting the results of a quadratic expenditure model using food data from Table 2.8.

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    assingment for IFA

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    This document outlines the key tasks for Assignment #2 which include: 1) explaining econometric methodology and defining economic data sets, 2) describing the assumptions of the Ordinary Least Squares (OLS) method, 3) writing a note on the variances and standard errors of OLS estimators, 4) explaining regression model functional forms, 5) linearizing and estimating the parameters of a transcendental production function using logarithms and data from Table 2.1, and 6) fitting and interpreting the results of a quadratic expenditure model using food data from Table 2.8.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    6 views1 page

    Assignment 2 IFA

    Uploaded by

    Shehzad Alum
    This document outlines the key tasks for Assignment #2 which include: 1) explaining econometric methodology and defining economic data sets, 2) describing the assumptions of the Ordinary Least Squares (OLS) method, 3) writing a note on the variances and standard errors of OLS estimators, 4) explaining regression model functional forms, 5) linearizing and estimating the parameters of a transcendental production function using logarithms and data from Table 2.1, and 6) fitting and interpreting the results of a quadratic expenditure model using food data from Table 2.8.

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    © All Rights Reserved
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    Assignment # 2

    1. Explain briefly econometric methodology.

    2. Define different kinds of economic data sets.

    3. What are the assumptions of the method of Least Squares (OLS)?

    4. Write a note on Variances and Standard Errors of OLS Estimators.

    5. Explain all the functional forms of regression models.

    6. Consider the following production function, known in the literature as

    the transcendental production function (TPF).

    𝜷 𝜷
    𝑸𝒊 = 𝜷𝟏 𝑳𝒊 𝟐 𝑲𝒊 𝟑 𝒆𝜷𝟒𝑳𝒊 +𝜷𝟓 𝑲𝒊

    where Q, L, and K represent output, labor, and capital, respectively.

    (a) How would you linearize this function? (Hint: logarithms.)

    (b) What is the interpretation of the various coefficients in the TPF?

    (c) Given the data in Table 2.1, estimate the parameters of the TPF.

    7. For the food expenditure data given in Table 2.8, see if the following

    model fits the data well:

    𝑺𝑭𝑫𝑯𝑶𝒊 = 𝜷𝟏 + 𝜷𝟐 𝑬𝒙𝒑𝒆𝒏𝒅𝒊 + 𝜷𝟑 𝒆𝒙𝒑𝒆𝒏𝒅𝟐𝒊

    and interpret your results.

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