Answered: QUESTION TWO You have been hired by the…

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 TWO You have been hired by the government to determine the impact of interest rates and Gross Domestic Product (GDP) (in billion Kwacha) on Money supply (in billion Kwacha) in Zambia. The data for this assignment, shown in the table below, covers the period 2007 to 2016. a) Express the data in matrix form. b) Set up the appropriate (XX) matrix and the XY vector c) Estimate the parameter vector B and its variance-covariance matrix. d) Compute the standard errors from the variance-covariance matrix in (c). e) Hence, test the impact of impact of interest rates and GDP on money supply using Page 3 of 3 the test of significance approach at 5%level of significance.

Money supply
Interest rate
GDP
10
19
56
13
19
67
14
22
77
18
21
97
22
19
114
26
12
131
31
10
151
35
12
167
47
13
183
45
16
216

Definition Definition Measure of how two random variables change together. Covariance indicates the joint variability or the directional relationship between two variables. When two variables change in the same direction (i.e., if they either increase or decrease together), they have a positive covariance. When the change is in opposite directions (i.e., if one increases and the other decreases), the two variables have a a negative covariance.

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