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Individual Assignment (MBA, 2012)

This document provides instructions for an individual assignment on basic econometrics for students in the Department of Economics at Debre Berhan University. It consists of 4 sections (A, B, C, D) with submission deadlines of December 12th or with a 2-3 day extension. Section A involves interpreting a linear consumption function and its parameter estimates, and predicting consumption at a given income level. Section B requires estimating a regression model between firm spending and profits using sample data, interpreting coefficients, and conducting significance tests. Section C involves similar regression analyses. Section D provides no details.

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anwar muhammed
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397 views

Individual Assignment (MBA, 2012)

This document provides instructions for an individual assignment on basic econometrics for students in the Department of Economics at Debre Berhan University. It consists of 4 sections (A, B, C, D) with submission deadlines of December 12th or with a 2-3 day extension. Section A involves interpreting a linear consumption function and its parameter estimates, and predicting consumption at a given income level. Section B requires estimating a regression model between firm spending and profits using sample data, interpreting coefficients, and conducting significance tests. Section C involves similar regression analyses. Section D provides no details.

Uploaded by

anwar muhammed
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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DEBRE BERHAN UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS


DEPARTMENT OF ECONOMICS
INDIVIDUAL ASSIGNMENT ON BASIC ECONOMETRICS (10%)

Submission Date - Regular: 12/12/2019


- Extension: 14/12/2019 for Section A & C
15/12/2019 for Section B & D

Instructions
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1. Elaborate the difference between ANOVA and regression analysis using examples.
2. In the linear consumption function,
∧ ∧
cons = β0 + β1 inc
∧
The (estimated) autonomous consumption is the intercept β0 and the (estimated) marginal propensity
∧
to consume (MPC) out of income is simply the slope, β1 while the marginal propensity to consume
𝝏𝒄𝒐𝒏
𝝏𝒊𝒏𝒄
. Using observations for 100 families on annual income and consumption expenditure (both

measured in dollars), the following equation is obtained:

𝒄𝒐𝒏𝒔 = 𝟏𝟐𝟒. 𝟖𝟒 + 𝟎. 𝟖𝟓 𝒊𝒏𝒄


A. Interpret the regression function and comment on the sign and magnitude of parameter estimates.
B. What is predicted consumption expenditure when family income is $30,000?
3. A researcher is using data for a sample of 32 companies to investigate the relationship between annual
spending Yi (measured in millions of dollars per year) and annual firm profits Xi (measured in millions
of dollars per year). Preliminary analysis of the sample data produces the following sample information:

∑ 𝒀𝒊 = 4,917 ∑ 𝑿𝒊 = 11,856 ∑ 𝒀𝒊 𝟐 =4,022,814


∑ 𝑿𝒊 𝟐 =25,796,522.5 ∑ 𝑿𝒊 𝒀𝒊 =9,785,312

A. Estimate a regression function Y = f(X) and Interpret the slope coefficient you estimate.
B. Compute the coefficient of determination and the coefficient of non-determination for the estimated
regression model and interpret.
C. Calculate the variances and standard errors of your estimated parameters
D. Undertake an overall significance test at 5% level of significance
E. Undertake an individual significance test for the slope coefficient at 5% level of significance
F. Construct a 95% confidence interval for the slope coefficient

DBU, Department of Economics 1|Page


Set By: Solomon E.

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