Working budget of $ 2 billion Methods research Coursework

Working budget of $ 2 billion Methods research - Coursework Example Using the three electronic resources, compile the required data for the 48 countries in an Excel spreadsheet (each row should represent a country and each column should contain the data for one variable). Gross Domestic Product (GDP) is very important in the calculation of the national income of any country. The GDP is calculated by adding the market value of all the final goods or services produced within a country in a given financial year. to be more specific no intermediate goods but only the final products or services because if intermediate goods are also taken into consideration then there would be the error of double calculation in the national income of the country. The GDP of a country is arrived at by adding the sum involved in the consumption activities, the investment activities, the spending by the government of the country and also the net exports (which is derived by deducting the gross imports from the gross exports). GDP = Cn + It + Gs + E(e-i) Where Cn = consumptio n, It = investment, Gs= Government spending, E= net exports, i= imports, e= exports. The exogenous model is also called as the most suitable model which is needed to understand and frame the long term economic growth of a country. Excel sheet attached. 2. Read the compiled data into Stata, and estimate the empirical model. Test the following null and alternative hypotheses: gen Lypc 2005 =log( ypc2005) gen Lypc1990 =log( ypc1990) gen diferrence lypc=log(ypc2005)-log(ypc1990) gen lseced = log(seced) gen infl= log( cpi1990)-log( cpi1985) inflation regress dlypc Lypc1990 lseced govgdp open infl credit (i) H0:?2=?3=?4=?5=?6=?7=0 against H1:?j?0 for at least one j?(2...7), using a significance level of 0.05. = = = 1.81 The Decision rule is that we can : Accept H0 if F0.05 Reject H0 if ?>F0.05 where F0.05 is the 5% critical value from F(k–1, n–k): in this case F(7–1,48–7), or F(6,41). F0.05 = 2.34 Decision is accept H0: F plays a significant role as F is the de termining factor of arriving at conclusions. The use of the independent variables has not assisted in predicting the dependent variable (dlypc). (ii) H0:?2=0 against H0:?2?0 using a significance level of 0.05. ii) H0:?2=0 against H1:?2?0 at a significance level of 0.05 ? = = = -2.68 Decision rule: Accept H0 if -t0.025 ? ? ? t0.025 Reject H0 if ? t0.025 ?t0.025 from t(41) is ?2.04 Decision is reject H0.: it means the variable (lypc90) has a significance impact in the depended variable (dlypc). We can see that there is a contradiction between the test in (i) and (ii). In (i) we accept that: ?2=?3=?4=?5=?6=?7=0 where in (ii) we reject that :?2=0 . Also, we can check by compare the p-value of the coefficient (0.011)