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1. Suppose you are given the following information: Model 1 lnYt = 4.99 +23.2D1 + 36.5D2 + .732 lnX2 2.798 D1lnX2 + 4.251 D2ln X2
1. Suppose you are given the following information: Model 1 lnYt = 4.99 +23.2D1 + 36.5D2 + .732 lnX2 2.798 D1lnX2 + 4.251 D2ln X2 .371 X3 +.405 D1lnX3 .236 D2lnX3 adjusted R2= .921, RSS = .018645 Model 2 lnYt = 4.18 +.103D1 + .103D2 + .621 lnX2 .201 lnX3 adjusted R2= .852, RSS = .04195 Where n = 29 D1 = 1 for observations 12 to 20, (period 2) and 0 otherwise. D2 = 1 for observations 21 to 29, (period 3) and 0 otherwise (a) What are the elasticities of Y with respect to X2 and X3 in period 1, 2, and 3 (c) How can one test the Null Hypothesis that there has been no structural change in the elasticities of Y with respect to X2 and X3 over the three time periods, observations 1 11, 12 20, and 21 29? Write out the null and alternative hypotheses in term of the Bs. Calculate the test statistic, and its distribution. Carry out the test and the 1% level. What is the result
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