We are interested in understanding consumption of pork in the U.S. so we run a regression of annual per capita consumption of pork on a series of independent variables using data from 1990 to 2018 and obtain the following regression results (standard errors in parenthesis) CPt = -330.3 + 49.1 In Inct - 0.34 PPt + 0.33PBt (7.40) (0.13) (0.12) DW=0.94 R²=0.71 Where CP is the annual per capita pounds of pork consumed in the U.S. in year t InInc, is the log of per capita disposable income in the U.S. in year t PP, is the average annualized real wholesale price of pork in the U.S. in year t (in cents per pound) PB, is the average annualized real wholesale price of beef in the U.S. in year t (in cents per pound) a. Interpret the partial slope coefficients. Does the sign on the coefficients agree or disagree with your a priori assumptions? Explain b. Using a two-sided test at the 5% significant level, determine if the partial slopes are statistically significant. c. Test the presence of autocorrelation at the 5% level. d. What remedy would you suggest to the problem identified in part c? Explain in detail how your transformed regression would look like.
We are interested in understanding consumption of pork in the U.S. so we run a regression of annual per capita consumption of pork on a series of independent variables using data from 1990 to 2018 and obtain the following regression results (standard errors in parenthesis) CPt = -330.3 + 49.1 In Inct - 0.34 PPt + 0.33PBt (7.40) (0.13) (0.12) DW=0.94 R²=0.71 Where CP is the annual per capita pounds of pork consumed in the U.S. in year t InInc, is the log of per capita disposable income in the U.S. in year t PP, is the average annualized real wholesale price of pork in the U.S. in year t (in cents per pound) PB, is the average annualized real wholesale price of beef in the U.S. in year t (in cents per pound) a. Interpret the partial slope coefficients. Does the sign on the coefficients agree or disagree with your a priori assumptions? Explain b. Using a two-sided test at the 5% significant level, determine if the partial slopes are statistically significant. c. Test the presence of autocorrelation at the 5% level. d. What remedy would you suggest to the problem identified in part c? Explain in detail how your transformed regression would look like.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter4A: Problems In Applying The Linear Regression Model
Section: Chapter Questions
Problem 2E
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