2. Suppose that the general fertility rate, gf re, is following an AR(1) process as shown in (3) below. (3) gfre=yo+Nigfrt-1 + €t. (a) Suppose that ₁ < 1. Obtain an expression for the mean and variance of gf r₂. State any assumptions you have to make and show all the steps you followed. (b) Suppose now that Var(elgfr-) = 0²gfr²_1. Briefly explain why you may not be able to obtain a Best Linear Unbiased Estimator (BLUE) of yo and ₁ by estimating (3) using OLS. Briefly outline how you can transform the model specification in (3) to obtain a BLUE estimator of the parameters in (3)
2. Suppose that the general fertility rate, gf re, is following an AR(1) process as shown in (3) below. (3) gfre=yo+Nigfrt-1 + €t. (a) Suppose that ₁ < 1. Obtain an expression for the mean and variance of gf r₂. State any assumptions you have to make and show all the steps you followed. (b) Suppose now that Var(elgfr-) = 0²gfr²_1. Briefly explain why you may not be able to obtain a Best Linear Unbiased Estimator (BLUE) of yo and ₁ by estimating (3) using OLS. Briefly outline how you can transform the model specification in (3) to obtain a BLUE estimator of the parameters in (3)
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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Question
Suppose that the general fertility rate, g f rt , is following an AR(1) process shown in the image below
A) if y1<1, what is the expression for the mean and variance of g f t rt showing any assumptions that were made .
b) suppose that Var (€|gfrt-1)= as shown in the image below.
explain why you may not obtain a best linear unbiased estimator of y0 and y1 by estimating (3) using OLS.
Transcribed Image Text:2. Suppose that the general fertility rate, gf re, is following an AR(1) process as shown in
(3) below.
(3)
gfrt=yo+Vigfrt-1 + €t.
(a) Suppose that ₁ < 1. Obtain an expression for the mean and variance of gf rt.
State any assumptions you have to make and show all the steps you followed.
(b) Suppose now that Var(e|gfrt) = o²gfr²_1.
Briefly explain why you may not be able to obtain a Best Linear Unbiased
Estimator (BLUE) of yo and y₁ by estimating (3) using OLS. Briefly outline how
you can transform the model specification in (3) to obtain a BLUE estimator of the
parameters in (3).
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