Question 3 We estimate the following production function using yearly data on the aggregated output, capital-labour rati

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Question 3 We Estimate The Following Production Function Using Yearly Data On The Aggregated Output Capital Labour Rati 1 (48.58 KiB) Viewed 8 times

Question 3 We estimate the following production function using yearly data on the aggregated output, capital-labour ratio and index of technology from 1909 to 1949. const 1_k 1_A Model 4.1: OLS, using observations 1909-1949 (T=41) Dependent variable: 1_q Mean dependent var Sum squared resid R-squared F(2, 38) Log-likelihood Schwarz criterion Tho Coefficient Std. Error -0.714139 0.00983437 0.330349 0.0106030 1.04797 0.00684346 -0.122458 0.002404 0.998758 15283.62 141.5762 -272.0118 0.426076 t-ratio -72.62 31.16 153.1 S.D. dependent var S.E. of regression Adjusted R-squared P-value(F) Akaike criterion |_q = log of aggregate output per worker-hour ($) Ik = log of aggregate capital/labour ratio ($) I_A = log of technology index Hannan-Quinn Durbin-Watson p-value <0.0001 <0.0001 <0.0001 0.220028 0.007954 0.998693 6.11e-56 -277.1525 -275.2805 1.142163 a) Find the anti-log (exponential) values for the capital-labour ratio and the technology index variable given the above estimated coefficient values in model 4.1. (5 marks)
b) Interpret the effect of capital-labour ratio (I_k) on the output per worker (l_q) using the above estimates. What does the estimates imply about the return to capital_labour ratio? (25 marks) c) State the null and the alternative hypothesis to test whether I_k is statistically significant. (10 marks) d) Calculate the test statistic and test the hypothesis in c) using critical value approach and 1% significance level. (25 marks) e) State the null and the alternative hypothesis to test if the model is statistically significant or not. (10 marks) f) Calculate the test statistic and test if the model is statistically significant using 5% significance level and state your procedure clearly. (25 marks) (100 marks total)