13. Consider a model with four lags: Yt = a, + 8,zt + 8,2t-1 – 822t-2 + 832t-3 + 847t-4 + Uz Now, let us assume that the 8; follows a quadratic in the lag, j: 8; = Yo + Vij + Y2j² for parameters, Yo, Y1, and y2. This is an example of a polynomial distributed lag (PDL) model. a. Plug the formula for each 8; into the distributed lag model and write the model in terms of parameters yn, for h = 0,1,2. b. Explain the regression you would run to estimate yr.

13. Consider a model with four lags: Yt = a, + 8,zt + 8,2t-1 – 822t-2 + 832t-3 + 847t-4 + Uz Now, let us assume that the 8; follows a quadratic in the lag, j: 8; = Yo + Vij + Y2j² for parameters, Yo, Y1, and y2. This is an example of a polynomial distributed lag (PDL) model. a. Plug the formula for each 8; into the distributed lag model and write the model in terms of parameters yn, for h = 0,1,2. b. Explain the regression you would run to estimate yr.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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