Hello, I am looking for someone to write an article on Economic theory. It needs to be at least 2000 words. This particular variable takes the value of one if the year being considered is 1983 and zero, otherwise. Moreover, annual data for Belgian aggregates for forty years, which is from 1955 to 1994, was used in the study.
Statistical analysis of the time series data considered in this study is facilitated by the use of E-views. According to Judge (2003), E-views is a “modern, powerful but intuitive econometrics software”. It operates by manipulating objects such as data series and equations. With the computer package, the author mentions that the “data series can also be viewed as a table of values or as points plotted on a graph”.
For the 40 time series observations provided, the ordinary least squares estimation procedure was used to estimate the parameters of the model with real per-capita consumption as the dependent variable. The models considered in the study depicting the relationship of the variables consumption, interest rate, per capita income and unemployment are:
Before the final model (model 3) was arrived at, models 1 and 2 were both tested for various assumptions. To determine if there is presence of first order autocorrelation, the Durbin-Watson test and the Breusch-Godfrey test were used. Ramsey’s RESET test, on the one hand was utilized to determine if non-linearity of the functional form. Normality of residuals was checked by way of graphs as well as statistics provided by the Jarque-Bera test. The White’s test was used to examine the presence of heteroscedasticity in the data set. Finally, first-order ARCH effects were also investigated. All tests of hypotheses were conducted using the 5% level of significance.
A summary of the results of the verification of the assumptions (misspecification tests), estimated coefficients for the parameters of the model with the corresponding t-ratios and the adjusted coefficient of determination are provided in table 1 below for the three models. A discussion of the results obtained for the analysis of the time series data on consumption is also provided below.
Table 1. Summary of the Results for the Three Models