Question
Consider a simple model to explain a city's automobiles accidents (totacc) in terms of number of cars in the city (totcar): log(totacc t ) =
Consider a simple model to explain a city's automobiles accidents (totacc) in terms of number of cars in the city (totcar):
log(totacct) = 0 + 1 log(totcart) + ut (1)
Estimating (1) using annual data from 1949-2020 gives
log(totacct) = 24.56 (3.21) + 0.88 (0.30) log(totcart), (2) n = 72, R2 = .473,
Consider a simple extension of model (1):
log(totacct) = 0 + 1 log(totcart) + 2 log(totcart1) + ut
After a 1% permanent increase in log(totcart),
(i) How much log(totacct) changes on impact?
(ii) How much log(totacct) changes after one period?
(iii) How much log(totacctt) changes after two periods?
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