Klein and Goldberger attempted to
fit the following regression model to the U.S. economy:
Yt = £]1
+ £]2X2i + £]3X3i
+ £]4X4i + Ui
Yi = £]1 + £]2(X2i + 0.75X3i + 0.625X4i ) + Ui = £]1 + £]2Zi + Ui
(a) Fit the modified model to the
accompanying data and obtain estimates of £]1
to £]4
(Eviews)
(Rats)
(b) How would you interpret the variable
Z? (Suggested Answer)
