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?

College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
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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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