Questions from General Economics

Q: Let gGDPt denote the annual percentage change in gross domestic product and

Let gGDPt denote the annual percentage change in gross domestic product and let intt denote a short term interest rate. Suppose that gGDPt is related to interest rates by where ut is uncorrelated wit...

Q: Suppose yt follows a second order FDL model: /

Suppose yt follows a second order FDL model: Let z* denote the equilibrium value of zt and let y* be the equilibrium value of yt, such that Show that the change in y*, due to a change in z*, equals th...

Q: When the three event indicators befile6, affile6, and afdec6 are

When the three event indicators befile6, affile6, and afdec6 are dropped from equation (10.22), we obtain R2 = .281 and R2 = .264. Are the event indicators jointly significant at the 10% level?

Q: Suppose you have quarterly data on new housing starts, interest rates

Suppose you have quarterly data on new housing starts, interest rates, and real per capita income. Specify a model for housing starts that accounts for possible trends and seasonality in the variables...

Q: One way to alleviate the multicollinearity problem is to assume that the

One way to alleviate the multicollinearity problem is to assume that the δj follow a relatively simple pattern. For concreteness, consider a model with four lags: Now, let us assume that...

Q: In October 1979, the Federal Reserve changed its policy of using

In October 1979, the Federal Reserve changed its policy of using finely tuned interest rate adjustments and instead began targeting the money supply. Using the data in INTDEF, define a dummy variable...

Q: Define the growth in hourly wage and output per hour as the

Define the growth in hourly wage and output per hour as the change in the natural log: ghrwage = ∆log(hrwage) and goutphr = ∆log(outphr). Consider a simple extensio...

Q: Okun’s Law—see, for example, Mankiw (1994,

Okun’s Law—see, for example, Mankiw (1994, Chapter 2)—implies the following relationship between the annual percentage change in real GDP, pcrgdp, and the change in the annual unemployment rate, cunem...

Q: (i) In the model with one endogenous explanatory variable,

(i) In the model with one endogenous explanatory variable, one exogenous explanatory variable, and one extra exogenous variable, take the reduced form for y2 (15.26), and plug it into the structural e...

Q: The following is a simple model to measure the effect of a

The following is a simple model to measure the effect of a school choice program on standardized test Performance where score is the score on a statewide test, choice is a binary variable indicating w...