The following model was specified to investigate the relationship between mineral exploitation and energy consumption in a small state over 1970-2006: ln(mining)t= β0 + β1ln(GDP_m)t + β2ln(exports)t + β3ln(energy)t + et where mining = the output of the mining and quarrying industry (constant 2000 US dollars); GDP_m = GDP less mining and quarrying industrial output (constant 2000 US dollars); exports = exports (constant 2000 US dollars); and energy = energy consumption (million kilowatts hours). OLS estimation of the preceding equation yields ln(mining)t=-5.76+0.81ln(GDP_m)t+0.21ln(exports)t-0.09ln(energy)t t-stat = (-3.82) (12.76) (3.53) (-2.49) p-value = (0.001) (0.000) (0.001) (0.017) R2=0.8905 n = 37 Durbin-Watson stat = 0.98 d) Interpret the coefficient on ln(energy). e) Are coefficients’ signs on explanatory variables within your expectation? Answer this question with a brief explanation. - f) The researcher suspect that export and energy are jointly insignificant. Describe step-by-step procedure the researcher should carry out to determine if the variables are jointly insignificant.
The following model was specified to investigate the relationship between mineral exploitation and energy consumption in a small state over 1970-2006:
ln(mining)t= β0 + β1ln(GDP_m)t + β2ln(exports)t + β3ln(energy)t + et
where mining = the output of the mining and quarrying industry (constant 2000 US dollars);
GDP_m = GDP less mining and quarrying industrial output (constant 2000 US dollars);
exports = exports (constant 2000 US dollars); and
energy = energy consumption (million kilowatts hours).
OLS estimation of the preceding equation yields
ln(mining)t=-5.76+0.81ln(GDP_m)t+0.21ln(exports)t-0.09ln(energy)t
t-stat = (-3.82) (12.76) (3.53) (-2.49)
p-value = (0.001) (0.000) (0.001) (0.017)
R2=0.8905 n = 37 Durbin-Watson stat = 0.98
d) Interpret the coefficient on ln(energy).
e) Are coefficients’ signs on explanatory variables within your expectation? Answer this question with a brief explanation.
-
f) The researcher suspect that export and energy are jointly insignificant. Describe step-by-step procedure the researcher should carry out to determine if the variables are jointly insignificant.
A regression problem has been given. A regression equation has been given and it has been asked to interpret the coefficient on ln(energy) and their signs. It has also been asked to state the process of testing if export and energy are jointly insignificant.
Step by step
Solved in 4 steps
