Table 66 gives data on percent change per year stock prices (Y) and consumer pri
ID: 1187882 • Letter: T
Question
Table 66 gives data on percent change per year stock prices (Y) and consumer prices (X) for a cross section of 20 cities.
******************* answer in "SAS format" please********************* (if possible)
1) Plot the data in scattergram
2) Regress Y on X and examine the residuals from this regression. What do you observe?
3) Since the data for city(E) is unusual, repeat the regression in (2) dropping the data on city(E). Now examine the residuals from this regression. What do you observe?
4) If on the basis of the results in (2) you conclude that there was heteroscedasticity in the error variance but on the basis of the results in (3) you reverse your conclusion, what general conclusions do you draw?
State whether the following statements are true or false. Breifly justify your answer:
5) When autocorrelation is present, OLS estimators are biased as well as inefficient;
6) The R squared values of two models, one involving regression in the first-difference form and another in the level form, are not directly comparable.
7) In the presence of heterscedasticity the usual OLS method always overestimates the standard errors of estimators.
8) If a regression model is mis-specified (e.g., an important variable is ommitted), the OLS residuals will show a distinct pattern.
TABLE 66Stock Prices and Consumer Prices CITY Y = Rate of Change, Stock Prices, Percent Per Year X = Rate of Change, Consumer Prices, Percent Per Year CITY Y X A 5 4.3 B 11.1 4.6 C 3.2 2.4 D 7.9 2.4 E 25.5 26.4 F 3.8 4.2 G 11.1 5.5 H 9.9 4.7 I 3.3 2.2 J 1.5 4 K 6.4 4 L 8.9 8.4 M 8.1 3.3 N 13.5 4.7 O 4.7 5.2 P 7.5 3.6 Q 4.73. 6 R 8 4 S 7.5 3.9 T 9 2.1
Explanation / Answer
Definition of 'Consumer Price Index - CPI' A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living. Sometimes referred to as "headline inflation." The U.S. Bureau of Labor Statistics measures two kinds of CPI statistics: CPI for urban wage earners and clerical workers (CPI-W), and the chained CPI for all urban consumers (C-CPI-U). Of the two types of CPI, the C-CPI-U is a better representation of the general public, because it accounts for about 87% of the population. CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation and large drops in CPI during a short period of time usually mark periods of deflation................................. A stock index or stock market index is a method of measuring the value of a section of the stock market. It is computed from the prices of selected stocks (sometimes a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments. An index is a mathematical construct, so it may not be invested in directly. But many mutual funds and exchange-traded funds attempt to "track" an index (see index fund), and those funds that do may not be judged against those that do.
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