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With the ever-present threat of droughts throughout the State, the New South Wales Government needs to consider methods to restrict household water consumption. The Government, thus, is interested in understanding the determinants of household water consumption in the State. They use quarterly data on water consumption (cons) and its price (price) from 2009 to 2019. 1. What regression do you need to estimate to test the null hypothesis that there is no linear trend in water consumption during the last 10 years. 2. Your friend argues that water consumption might be higher during summer compared to other seasons. Propose a regression to test your friend's argument. Some econometricians propose the following finite distributed lag model to capture the effect of water price on water consumption: const = Bo + aprice, + a2price 1 + aprice 2 + u 3. What problems may arise when estimating with OLS a; (j = 1, 2, 3) parameters given that you have a time series data? 4. How do these a; (j = 1, 2, 3) parameters relate to the long-run propensity (LPR), i.e. the change in the equilibrium value of water consumption (cons) in response to a permanent change in water price (price)? Rewrite the original model to directly estimate the LRP and its standard error.

With the ever-present threat of droughts throughout the State, the New South Wales Government needs to consider methods to restrict household water consumption. The Government, thus, is interested in understanding the determinants of household water consumption in the State. They use quarterly data on water consumption (cons) and its price (price) from 2009 to 2019. 1. What regression do you need to estimate to test the null hypothesis that there is no linear trend in water consumption during the last 10 years. 2. Your friend argues that water consumption might be higher during summer compared to other seasons. Propose a regression to test your friend's argument. Some econometricians propose the following finite distributed lag model to capture the effect of water price on water consumption: const = Bo + aprice, + a2price 1 + aprice 2 + u 3. What problems may arise when estimating with OLS a; (j = 1, 2, 3) parameters given that you have a time series data? 4. How do these a; (j = 1, 2, 3) parameters relate to the long-run propensity (LPR), i.e. the change in the equilibrium value of water consumption (cons) in response to a permanent change in water price (price)? Rewrite the original model to directly estimate the LRP and its standard error.

MATLAB: An Introduction with Applications
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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With the ever-present threat of droughts throughout the State, the New South Wales Government needs to consider methods to restrict household water consumption. The Government, thus, is interested in understanding the determinants of household water consumption in the State. They use quarterly data on water consumption (cons) and its price (price) from 2009 to 2019. 1. What regression do you need to estimate to test the null hypothesis that there is no linear trend in water consumption during the last 10 years. 2. Your friend argues that water consumption might be higher during summer compared to other seasons. Propose a regression to test your friend's argument. Some econometricians propose the following finite distributed lag model to capture the effect of water price on water consumption: const = Bo + pricet + a2price 1 + aprice+ 2 + ut 3. What problems may arise when estimating with OLS aj (j = 1, 2, 3) parameters given that you have a time series data? 4. How do these a, (j = 1, 2, 3) parameters relate to the long-run propensity (LPR), i.e. the change in the equilibrium value of water consumption (cons) in response to a permanent change in water price (price)? Rewrite the original model to directly estimate the LRP and its standard error.
Transcribed Image Text:With the ever-present threat of droughts throughout the State, the New South Wales Government needs to consider methods to restrict household water consumption. The Government, thus, is interested in understanding the determinants of household water consumption in the State. They use quarterly data on water consumption (cons) and its price (price) from 2009 to 2019. 1. What regression do you need to estimate to test the null hypothesis that there is no linear trend in water consumption during the last 10 years. 2. Your friend argues that water consumption might be higher during summer compared to other seasons. Propose a regression to test your friend's argument. Some econometricians propose the following finite distributed lag model to capture the effect of water price on water consumption: const = Bo + pricet + a2price 1 + aprice+ 2 + ut 3. What problems may arise when estimating with OLS aj (j = 1, 2, 3) parameters given that you have a time series data? 4. How do these a, (j = 1, 2, 3) parameters relate to the long-run propensity (LPR), i.e. the change in the equilibrium value of water consumption (cons) in response to a permanent change in water price (price)? Rewrite the original model to directly estimate the LRP and its standard error.
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