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Bharathidasan University-Econometrics-QP-Nov-2010
Bharathidasan University-Econometrics-QP-Nov-2010
Bharathidasan University
M.A. Economics - Semester Examination – November 2010
Subject: Econometrics (09EM11)
Time : 3 Hours Max Marks : 60
Section A
(10 x 1 = 10 Marks )
Answer all the Questions
2. In a regression model of the form Yi = α + β Xi + ui, when can you come to a conclusion
that X does not influence Y.
3. If two independent variables are highly correlated, would you have any problem in
estimating the regression model? If yes, state the problem.
4. When can you say that a particular regression model is best fit?
9. What is the need of the disturbance term ‘u’ in econometrics model specification?
Section B
(6 x 5 = 30 Marks )
Answer any 6 Questions
12. Discuss with examples the major reasons for occurrence of lags in economics.
13. Explain with an example , the problem of identification in simultaneous equation models.
14. A dummy variable regression model is developed as
Yi = β1 + β2D2i + β3D3i + β4Xi + ui
Yi = Average annual salary of worker , Xi = Bonous income , D2 = 1 if semi urban area
else 0, D3 = 1 if Rural else 0. Reference category is Urban region 1 if urban else 0.
The Results of above mentioned dummy variable regression is given below
Yi = 13,269 - 1673 - 1144 + 3.288 Xi R2 = .76245
SE = 1395 801.2 861.3 0.317
t = ( 9.51)* (-2.08)* (-1.32)** (10.35)*
What is the implication of the intercept term here? Interpret the co-efficients and
goodness of fit of the model
15. Elucidate the functional form of cobb-douglas production function and explain its
properties.
16. Explain the causes of multicollinearity. Discuss the solutions that can be adopted for the
incidence of multicollinearity
18. Explain the difference between R2 and Adjusted R2. How do you test the significance of a
regression co-efficient?
Section C
(2 x 10 = 20 Marks )
Answer any Two Questions
19. Explain with examples, the step by step procedure, how the econometricians proceed in
their analysis of an economic problem.
21. The values of advertising expenditure (Rs. in ‘000’) and sales volume (no. of Units) of a
soap making firm for the past 7 years are given. Set up a simple linear regression model
of the form Y = α + βx + u and estimate the regression co-efficients. Predict the sales
when advertising expenditure is 13000.
Advertising expenditure: 7 10 9 4 11 5 3
Sales : 12 14 13 5 15 7 4