Suppose you are interested in explaining variation in quarterly Net Exports (billions)and that you estimate the regression function (standard errors in parentheses) $\begin{array} { l }
\text { Net } \widehat {Exp}orts_ { t } =& - 207.66 +& 0.48 \text { Exchange } \text {Rate }_{t } +& 1.39 \text { Personal Income } _ { t } \
& (42.31) &(0.15) &\text { (0.43) } \
n = 116 \
R ^ { 2 } = .9528 \
\end{array}$
a)How many years' worth of data do you have? How can you tell? Explain.
b)Do you suspect that autocorrelation might be present in this model? If so,what type? Why? Explain.
c)How would you use the Regression test for AR(1)to determine whether autocorrelation is present? Explain.
d)Suppose you know that the autocorrelation follows an AR(1)process.How would you use the Prais-Winsten method to correct for the autocorrelation? Explain.
e)When using the Prais-Winsten method,how many observations will you have in your final analysis? Why? Explain.

Question

Suppose you are interested in explaining variation in quarterly Net Exports (billions)and that you estimate the regression function (standard errors in parentheses) $\begin{array} { l } 
\text { Net } \widehat {Exp}orts_ { t } =& - 207.66 +& 0.48 \text { Exchange }  \text {Rate }_{t } +& 1.39 \text { Personal Income } _ { t } \
& (42.31) &(0.15)  &\text { (0.43) } \
n = 116 \
R ^ { 2 } = .9528 \
\end{array}$ 
a)How many years' worth of data do you have? How can you tell? Explain.
b)Do you suspect that autocorrelation might be present in this model? If so,what type? Why? Explain.
c)How would you use the Regression test for AR(1)to determine whether autocorrelation is present? Explain.
d)Suppose you know that the autocorrelation follows an AR(1)process.How would you use the Prais-Winsten method to correct for the autocorrelation? Explain.
e)When using the Prais-Winsten method,how many observations will you have in your final analysis? Why? Explain.

Quizplus · Accepted Answer

The Answer of Suppose you are interested in explaining variation in quarterly Net Exports (billions)and that you estimate the regression function (standard errors in parentheses) $\begin{array} { l } 
\text { Net } \widehat {Exp}orts_ { t } =& - 207.66 +& 0.48 \text { Exchange }  \text {Rate }_{t } +& 1.39 \text { Personal Income } _ { t } \
& (42.31) &(0.15)  &\text { (0.43) } \
n = 116 \
R ^ { 2 } = .9528 \
\end{array}$ 
a)How many years' worth of data do you have? How can you tell? Explain.
b)Do you suspect that autocorrelation might be present in this model? If so,what type? Why? Explain.
c)How would you use the Regression test for AR(1)to determine whether autocorrelation is present? Explain.
d)Suppose you know that the autocorrelation follows an AR(1)process.How would you use the Prais-Winsten method to correct for the autocorrelation? Explain.
e)When using the Prais-Winsten method,how many observations will you have in your final analysis? Why? Explain.

Suppose You Are Interested in Explaining Variation in Quarterly Net