Answered step by step
Verified Expert Solution
Question
1 Approved Answer
{Cl Suppose you are examining how exchange rate of Canadian dollars with US dollars (EX) is affected by oil price (DP) and Canadian domestic interest
{Cl Suppose you are examining how exchange rate of Canadian dollars with US dollars (EX) is affected by oil price (DP) and Canadian 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 September 2001 twin tower attacks in the United States. You obtain annual data on the variables over the period 1930-2015 and estimate the following models for the entire sample and for the subsamples of 1980-2001 and 2002-2015: EX: 2 .30 + 31015} + )3th + \"r Your calculated F statistic for the structural break test is given by F: 36. In view of the above information, answer the following questions: {i} If the unrestricted SSR is 240 and SSR of the estimated model of 1930-2001 is 130 then what is the SSH of the estimated model for the 2002-2015 period? (ii) What would you infer about the presence of structural break in the model of Canadian dollar exchange rate at the 5% level of signicance? (5 Marks}
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started