The accompanying table gives data
on special drawing rights (SDRs),
also know as paper gold, and balance
of Payments for 10 countries
for the year 1974.
(a) From the data, is there a discernible relationship between the SDRs and the BOP? (Eviews)
(b) Test i) disturbance variance
is proportional to the square of the BOP (Eviews)
ii) disturbance variance is proportional to the expected SDRs based on
BOP (Eviews)
(c) Can you use the log transformation to treat the data? Why or why not? (Eviews)(Rats)
(d) Apply the rank correlation test to residual obtained from the regression
in (a) and the BOP
figure. Can you say anything about heteroscedasticity
based on this test? (Suggested
Answer)
