Assume that the econometric model is as follows Yt = β1 + β2X2t + β3X3t + β4X4t + β5X5t + ut You decide to investigate the relationship of the above econometric model using the null hypothesis of H0: β3 + β4 = 1 and β5 = 1. Derive the restricted regression that can be estimated from the above model   The regressions are carried out on a sample of 96 quarterly observations, and the residual sums of squares (RSS) for the restricted and unrestricted regressions are 102.87 and 91.41, respectively. Perform the test. What is your conclusion?

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Assume that the econometric model is as follows

Yt = β1 + β2X2t + β3X3t + β4X4t + β5X5t + ut

You decide to investigate the relationship of the above econometric model using

the null hypothesis of H0: β3 + β4 = 1 and β5 = 1.

  1. Derive the restricted regression that can be estimated from the above model

 

  1. The regressions are carried out on a sample of 96 quarterly observations, and the residual sums of squares (RSS) for the restricted and unrestricted regressions are 102.87 and 91.41, respectively. Perform the test. What is your conclusion?
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