Suppose that we are comparing results in the following two models Model A: Y_i_t = 0.9Y_i_,t-1 + 2X_1i_t Model A: Y_i_t = 0.8Y_i_,t-1 + 2X_1i_t Which of the following is true? A) The long-term effect of a one unit change in X will be 10 times bigger in Model A than in Model B) The long-term effect of a one unit change in X will be 10 percent bigger in Model A than in Model C) The short-term effect of a one unit change in X will be bigger in Model A than in Model D) The short-term effect of a one unit change in X will be smaller in Model A than in Model

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Quizplus · Accepted Answer

In Model A, the coefficient of XS1U1B1 is 10 times larger than in Model B (F1F1F1S1F1F1F10 vs F1F1F1S1F1F1F10), therefore the long-term effect of a one unit change in X will be 10 times bigger in Model A than in Model B.

Suppose That We Are Comparing Results in the Following Two