Assignment – Estimating models

Applied Econometrics And Quantitative Analysis

For this group assignment Input – Output Function Data will be used from
website databank.worldbank.org. Use knowledge of nine first chapters as
reference for this assignment. (Crossectional data)

The main purpose of the assignment is to use this data to examine different
models, both linear and nonlinear functional forms. The first part of the
assignment uses only the input – output process with at least 2 explanatory
variables and at least 35 observations for a single equation model.

Basic theories about input – output process (10%)

Review (10%) (including at least 2 researchs with same ideal) and Explain for
these variables selected to your model (5%) (The research gaps)

Assignment

In this part we will evaluate the following different forms for a single equation
model. Please chose how you interpret the four models below, and explain your
decisions.

Evaluate the following functions for the data:

1. Linear function
2. Quadratic function
3. Logarithm function
4. Semi Logarithm function

Estimate (15%)

Interpret your estimation results (15%)

With each type of regression function, take at least 2 tests of economical

assumptions (Hint: The manufacturing process has a constant effect on the
scale: β 2+ β3 =1) (20%)

Evaluate the data with all four models, perform diagnostic techniques and
decide on which is best option according to data. Remember to take into
account diagnostic methods in the final choice and interpret model in words.
(15%)

Comunication: your suggestions and prediction (10%)

General instructions
The assignment should as a minimum include all estimated models, with all
usual important aspects of model estimation. Use Excel or econometrics
softwares for those parts that can be done directly in a computer. All important
Steps should be reported in the assignment as well, either in the text
continuously or as an separate appendix.

Please include all important tables and if needed some charts that illustrates the
method of work and/or diagnstic reasoning to support the conclusions done
about the estimated models.

The assignment must be turned in at latest 3rd December before the main
examination of the course, and place in one address: TEAMS

Including files on your report:

1/ A Word file contains all of your group analysis
2/ An Excel file contains your data for regression analysis
3/ A PowerPoint shows your brief results.