STATISTICS

• FIXED EFFECTS MODEL

• RANDOM EFFECTS MODEL

• POOLED OLS

FROM THE 3 MODELS ABOVE, ANSWER THE FOLLOWING QUESTIONS:

(A) Test whether each of the 3 estimated production functions using 3 methods above exhibit constant returns to scale. (3 MARKS)

(B) As a consultant, please explain to your manager the implications of the returns to scale you have estimated in the production function in each of three methods (3 MARKS)

Dependent Variable: LNY Method: Panel EGLS (Cross-section random effects) Date: 08/15/23 Time: 21:28 Sample: 19952015 Periods included: 21 Cross-sections included: 4 Dependent Variable: LNY Method: Panel Least Squares Date: 08/15/23 Time: 21:26 Sample: 19952015 Periods included: 21 Cross-sections included: 4 Total panel (balanced) observations: 84 Dependent Variable: LNY Method: Panel EGLS (Cross-section random effects) Date: 08/15/23 Time: 21:28 Sample: 19952015 Periods included: 21 Cross-sections included: 4 Dependent Variable: LNY Method: Panel Least Squares Date: 08/15/23 Time: 21:26 Sample: 19952015 Periods included: 21 Cross-sections included: 4 Total panel (balanced) observations: 84