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(c) Suppose you are examining how exchange rate of Singaporean dollars with US dollars (EX) is affected with oil price (OP) and Singaporean domestic interest
(c) Suppose you are examining how exchange rate of Singaporean dollars with US dollars (EX) is affected with oil price (OP) and Singaporean domestic interest rates (R). You are particularly interested to test if there was any structural break in your model of exchange rate in 2001, the year of 9- 11 twin tower attacks. You obtain annual data on the variables over the period 1980-2015 and estimate the following models for the entire sample and for the sub samples of 1980-2001 and 2002-2015: EX+ = Bo + B1OPt + B2Rt + Ut Your calculated F statistic for the structural break test is given by F= 21. In view of the above information, answer the following questions: (i) If the unrestricted SSR is 270 and SSR of the estimated model of 1980-2001 is 190 then what is the SSR of the estimated model for the 2002-2015 period? (ii) What would you infer about the presence of structural break in the model of Singaporean dollar exchange rate at the 5% level of significance? (5 Marks) (c) Suppose you are examining how exchange rate of Singaporean dollars with US dollars (EX) is affected with oil price (OP) and Singaporean domestic interest rates (R). You are particularly interested to test if there was any structural break in your model of exchange rate in 2001, the year of 9- 11 twin tower attacks. You obtain annual data on the variables over the period 1980-2015 and estimate the following models for the entire sample and for the sub samples of 1980-2001 and 2002-2015: EX+ = Bo + B1OPt + B2Rt + Ut Your calculated F statistic for the structural break test is given by F= 21. In view of the above information, answer the following questions: (i) If the unrestricted SSR is 270 and SSR of the estimated model of 1980-2001 is 190 then what is the SSR of the estimated model for the 2002-2015 period? (ii) What would you infer about the presence of structural break in the model of Singaporean dollar exchange rate at the 5% level of significance
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