Let Y denote total expenditure on consumer durables, nondurables, and services and E d , E n , and E s are the expenditures on the three categories As defined, Y E d E n E s Now, consider the expenditure system E d d d Y dd P d dn P n ds P s d , E n n n Y nd P d nn P n ns Ps n , E s s s Y sd P d sn P n ss P s s Prove that if all equations are estimated by ordinary least squares, then the sum of the expenditure coefficients will be 1 and the four other column sums in the preceding model will be zero

Question: Let Y denote total expenditure on consumer durables, nondurables, and services and E d , E n , and E s are the expenditures on

Let Y denote total expenditure on consumer durables, nondurables, and services and E_d, E_n, and E_s are the expenditures on the three categories. As defined, Y = E_d + E_n + E_s. Now, consider the expenditure system

E_d = α_d + β_dY + γ_ddP_d + γ_dnP_n + γ_ds P_s + ε_d,
E_n = α_n + β_nY + γ_ndP_d + γ_nnP_n + γ_ns Ps + ε_n,
E_s = α_s + β_sY + γ_sdP_d + γ_snP_n + γ_ss P_s + ε_s.

Prove that if all equations are estimated by ordinary least squares, then the sum of the expenditure coefficients will be 1 and the four other column sums in the preceding model will be zero.

Step by Step Solution

★★★★★

3.37 Rating (169 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

For convenience reorder the variables so that X i P d P n P s Y The three de... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (2 attachments)

1619_60641d706142b_699606.pdf

180 KBs PDF File

1619_60641d706142b_699606.docx

120 KBs Word File

Students Have Also Explored These Related Econometric Analysis Questions!

Consider the construction of a sulfur pollution control system at the power generating facility in Page, AZ. The aim of the project is to install sulfur dioxide "scrubbers" at the power plant in...

You are the group management accountant of a large divisionalized group. There has been extensive board discussion of the existing system of rewarding Divisional General Managers with substantial...

Consumption of durables is more variable relative to trend than consumption of semi-durables, and consumption of semi-durables is more variable relative to trend than con-sumption of nondurables and...

Consumption of durables is more variable relative to trend than is consumption of nondurables and consumption of nondurables is more variable relative to trend than is consumption of services....

Demand system estimation. Let Y denote total expenditure on consumer durables, nondurables, and services and Ed, En, and Es are the expenditures on the three categories. As defined, Y = Ed + En + Es....

4. Consider the following demand equation system. Let Ybe total expenditure on comsumer durables, non-durables and services and (Ed, En, Es) be expenditures on the three categories, and (Pd, Pn, Ps)...

1. The four categories of final users of GDP are businesses, firms, governments, and the foreign sector. households, the Federal Reserve, governments, and the foreign sector. businesses,...

Evaluation and Control in Strategic Management Evaluation and control information consists of performance data and activity reports (gathered in Step 3 in Figure 11-1). If undesired performance...

SUMMARY this article for about 2 pages with single spacing. Thank you. ECONOMETRICS: MEASUREMENT I N ECONOMICS1 I As the first incumbent of a new Chair in this University, I thought that in this...

1. Does anticipated inflation or unanticipated inflation discourage economic growth? Why? 2. Answer the following questions about nominal and real interest rates. a. What would be the real interest...

Write and discuss 5 or more ideas regarding The Buying Process (page 110-112). Identify at least 3-4 specific ways a professional marketer can use this model to evaluate a selected product or service...

The following data apply to Neuman Corporation's convertible bonds: Maturity: 10 Stock price: $30.00 Par value: $1,000.00 Conversion price: $35.00 Annual coupon: 5.00% Straight-debt yield: 8.00%....

Are you a homosexual?

the region that lies under the paraboloid z = x 2 + y 2 and above the triangle enclosed b y the lines x = 9 , y = 0 , and y = 5 x

One of your regulars walks into the restaurant. After placing themselves on a virtual waitlist at their apartment, they drive over knowing that the host will seat them upon arrival. As soon as they...

2) V= 20 e In = ? 9 V2 2= A+2HJ (B+C) 2es = ?

A=8 B=5 C=7 VW=17 Cos (1ot+ 27) 4) R= B+1L C = A+C F 2L'nin Gexebi ecasi azoni gucu ue dejuini bulunur. Karsilk gelen ZL P2Lmox =? ZLmax=? %3!

1. (35pt)A rectangular box with an open top and one partition is to be constructed from 288 square inches of cardboard. Find the dimensions that result in a box with largest possible volume.

What can be done to improve the security of business uses of the Internet? Give several examples of security measures and technologies you would use.

=+22. Suppose the right-tail probability of a nonnegative random variable X satisfies |1 F(x)| cxn for all sufficiently large x, where n is a positive integer, and and c are positive real numbers....

Three variables, N, D, and Y, all have zero means and unit variances. A fourth variable is C = N + D. In the regression of C on Y, the slope is 0.8. In the regression of C on N, the slope is 0.5. In...

Using the matrices of sums of squares and cross products immediately preceding Section 3.2.3, compute the coefficients in the multiple regression of real investment on a constant, real GNP and the...

% Numerical Integration . . clear clc % xl is the lower bound, % xu is the upper bound, % and wid is the interval width xl = 0 . 2 ; xu = 1 0 ; wid = 1 ; k = 0 ; I = 0 ; % the integral needs to be...

Makers of brand A centralized server PCs guarantee that upkeep costs are lower for their gear than for that of their closest rival. Prior to buying brand A. an organization makes a free examination...

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.42 million. The fixed asset will be depreciated straight-line to zero over its...