Current studies discussed the impact of the Covid-19 pandemic on the money demand, consumption, manufacturing, and inves

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Current Studies Discussed The Impact Of The Covid 19 Pandemic On The Money Demand Consumption Manufacturing And Inves 1 (73.43 KiB) Viewed 20 times

Current studies discussed the impact of the Covid-19 pandemic on the money demand, consumption, manufacturing, and investment in the economies of emerging market economies and the influence of monetary policies of the central banks in curtailing the impact of the pandemic. Suppose you are interested in studying the determinants of money. You plan to use the following model: InM = Bo + B.InINCOME+B DIR+u where M= demand broad money in Ringgit Malaysia), INCOME= gross domestic product (in Ringgit Malaysia), DIR= deposit interest rate (in %), In-natural logarithm You run the regression for t=37, and obtain the following results: Dependent Variable: InM Sample: 1980 2016 Included observations: 37 Variable Coefficient Std. Error t-Statistic Prob. DIR InINCOME с 0.015980 -1.942257 0.060136 27.31149 1.667350 -10.35747 0.0604 0.0000 0.0000 R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.981015 Mean dependent var 26.47326 Mean InINCOME 26.72883 0.160237 Mean DIR 0.052310 0.872977 Akaike info criterion -0.746724 16.81440 Schwarz criterion -0.616109 878.4514 Hannan-Quinn criter. -0.700677 0.000000 Durbin-Watson stat 1.043789 cov(B1,B2) = = 0.0012
Answer the following questions. a. Write down your estimated model. Interpret the regression. Does it make economic sense? (5 marks) b. Establish a 95 percent confidence interval for the B1. Would you reject the hypothesis that the true slope coefficient is 3.0? (3 marks) c. Compute adjusted R2. Interpret your answer. (2 marks) d. Is the estimated slope coefficient significant at the 5 percent level of significance? What is the null hypothesis you are testing? What are the underlying assumptions of the test(s) you use? (3 marks) e. Are deposit interest rate and gross domestic product jointly significant in the equation at the 5 percent level of significance? Show the test and explain your answer. (2 marks) f. Given the preceding results, would you retain the intercept term in the model? Why or why not? (2 marks) g. The elasticity of deposit interest rate is (1 mark) h. Test whether the B1 = B2 at 5 percent level of significance. (2 marks)