Econometrics problem 2.docx

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Krzysztof Stępień
Problem 2

a)      If we increase TV ads expenditures in March 2011 by 2500, so we expect that sales increase by 42,23 * 2,5= 105,575 thousands in April 2011.

b)      Estimated variance of error term will be RSS/(n-K)= 0,5218/(20-4)=0,3216

c)      t0,05=2,11991

Pb3-tα*Sb3<β3<b3+tα*Sb3=1-α
-0,6222-2,11991*2,475<β3<-0,6222+2,11991*2,475
(-5,869<β3<4,626)
At 95% confidence level interval (-5,869; 4,626) covers β3.

d)      BIC=lnei2n+K*ln⁡(n)n, BIC1 –model in the introduction, BIC2 – model in sub point
BIC1 = ln(0,521820) + 4*ln⁡(20)20=-3,047
BIC2 = ln(3,23821) + 2*ln⁡(21)21= -1,580
BIC1<BIC2
Better is model in introduction (BIC1).

 

 

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