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1. Time Series. Suppose you have quarterly data on new housing starts yt, interest rates rt, and real per-capital income gt. (a) Specify a model for housing starts that accounts for possible trends and seasonality in the variables (b) Even after accounting for trends and seasonality you suspect there may be serial correlation in the error term. What are the consequences of this for OLS? (c) Specity a test for a simple form of serial correlation. (d) Suppose you conclude based on this test that you do have a problem with serial correlation. Describe a solution.

1. Time Series. Suppose you have quarterly data on new housing starts yt, interest rates rt, and real per-capital income gt. (a) Specify a model for housing starts that accounts for possible trends and seasonality in the variables (b) Even after accounting for trends and seasonality you suspect there may be serial correlation in the error term. What are the consequences of this for OLS? (c) Specity a test for a simple form of serial correlation. (d) Suppose you conclude based on this test that you do have a problem with serial correlation. Describe a solution.

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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1. Time Series. Suppose you have quarterly data on new housing starts yt, interest rates rt, and real per-capital income gt. (a) Specify a model for housing starts that accounts for possible trends and seasonality in the variables (b) Even after accounting for trends and seasonality you suspect there may be serial correlation in the error term. What are the consequences of this for OLS? (c) Specity a test for a simple form of serial correlation. (d) Suppose you conclude based on this test that you do have a problem with serial correlation. Describe a solution.
Transcribed Image Text:1. Time Series. Suppose you have quarterly data on new housing starts yt, interest rates rt, and real per-capital income gt. (a) Specify a model for housing starts that accounts for possible trends and seasonality in the variables (b) Even after accounting for trends and seasonality you suspect there may be serial correlation in the error term. What are the consequences of this for OLS? (c) Specity a test for a simple form of serial correlation. (d) Suppose you conclude based on this test that you do have a problem with serial correlation. Describe a solution.
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