Baltagi and Griffin considered the following gasoline demand function:* ln Y it = 1 +

Baltagi and Griffin considered the following gasoline demand function:*

ln Y_it = β₁ + β₂ ln X_2it + β₃ ln X_3it + β₄ ln X_4it + u_it

Where Y = gasoline consumption per car; X₂ = real income per capita, X₃ = real gasoline price, X₄ = number of cars per capita, i = country code, in all 18 OECD countries, and t = time (annual observations from 1960–1978). Note: Values in table are logged already.

a. Estimate the above demand function pooling the data for all 18 of the countries (a total of 342 observations).

b. Estimate a fixed effects model using the same data.

c. Estimate a random components model using the same data.

d. From your analysis, which model best describes the gasoline demand in the 18 OECD countries? Justify your answer.