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.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter5: Business And Economic Forecasting
Section: Chapter Questions
Problem 1.4CE
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![13. Consider a model with four lags:
Yt = a, + 80zt + 8,Zt-1 – 822t-2 + 832t-3 + 84Z¢-4 + Ut
Now, let us assume that the 8; follows a quadratic in the lag, j:
8; = Yo + Y1j + Y2j?
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 yr, for h = 0,1,2.
b. Explain the regression you would run to estimate yn.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F968a2f38-eadf-4298-b7d1-8f28ff32bf5d%2F374213fd-af1e-4faa-8b8b-02f35b6fa3fc%2F2qsb5jl_processed.png&w=3840&q=75)
Transcribed Image Text:13. Consider a model with four lags:
Yt = a, + 80zt + 8,Zt-1 – 822t-2 + 832t-3 + 84Z¢-4 + Ut
Now, let us assume that the 8; follows a quadratic in the lag, j:
8; = Yo + Y1j + Y2j?
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 yr, for h = 0,1,2.
b. Explain the regression you would run to estimate yn.
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