BECE 142 APPLIED ECONOMETRICS Solved Assignment 2022-23

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BECE 142 Solved Assignment 2022-23

Course Code: BECE 142

Assignment Code: BECE 142/TMA/2022-23

Max. Marks: 100

A. Long Answer Questions (word limit-500 words) 2 × 20 = 40 marks

1) Explain, theoretically, the consequences of omitting relevant variables in econometric modelling.

As pointed out earlier, we usually encounter three kinds of problems in an econometric model:

a) Inclusion of irrelevant/redundant variables

b) Omission of relevant variables Each of the above problem results in a different kind of bias. We discuss each of these problems below

Inclusion of Irrelevant Variable

Thus, E(𝛽௜ ଶ) = E(𝛽መ ଶ௦) = 0 So, we find that 𝛽መ ଶ௦ which is absent from the true model has its coefficient 0. Thus we obtain unbiased estimators for both the parameters. This leads us to conclude that inclusion of irrelevant variables is not that harmful as omission of relevant variables. As an extra variable is added to the model, we observe that there is an increase in R-squared. The variance of the parameters will not be efficient. Therefore, the specification error in the nature of inclusion of irrelevant variables in the model, will produce unbiased but inefficient least squares estimators of the parameters. The larger variance reduces the precision of the estimates resulting in wider confidence intervals. This may lead to type II error (the error of not rejecting a null hypothesis when the alternative hypothesis is actually true).

Omission of Relevant Variable

Now let us look into the other side of the spectrum – excluding a relevant variable. Since a relevant variable is not included in the model (although it influences the dependent variable) its impact will be included in the residuals. As a result, the residuals will show a systematic pattern rather than being white noise as required by Gauss-Markov theorem. Also, the coefficient of the included variable will be biased.

Suppose the true equation (in deviation form) is

𝑦 = 𝛽ଵ𝑥ଵ + 𝛽ଶ𝑥ଶ + u

Instead of estimating equation (13.11) suppose we omitted 𝑥ଶ. The following equation is estimated,

𝑦 = 𝛽ଵ ∗𝑥ଵ + e

2) Discuss the effect of lags on ‘market equilibrium’ with suitable examples.

B. Medium Answer Questions (word limit-250 words) 3 × 10 = 30 marks

3) Outline how R 2 and adjusted-R 2 serve as indicators of ‘goodness of fit’ of a regression model.

4) Indicate the form of a Logit Model. Specify why the OLS method of estimation cannot be applied here.

5) Show that ‘exact identification’ is a sufficient condition for the unique determination of a system of equations.

C. Short Answer Questions (word limit 100 words) 2 × 3 × 5 = 30 marks 6) Differentiate between:

(a) Quantitative Research and Qualitative Research.

(b) In-sample forecast and out-of-sample forecast.

(c) Autoregressive Model and Autoregressive Distributed Lag Model.

7) Write short notes on the following.

(a) Instrumental Variables (IV) Method.

(b) Pooled Cross Section Data.

(c) Linear Static Panel Data Model.

IGNOU Assignment Status 2022-23

BECE 142 APPLIED ECONOMETRICS Solved Assignment 2022-23: Those students who had successfully submitted their Assignments to their allocated study centres can now check their Assignment Status. Alongside assignment status, they will also checkout their assignment marks & result. All this is often available in a web mode. After submitting the assignment, you'll check you IGNOU Assignment Status only after 3-4 weeks. it'd take 40 days to declare.

BECE 142 Solved Assignment 2022-23 Those students who had successfully submitted their Assignments to their allocated study centres can now check their Assignment Status. Along with assignment status, they can also checkout their assignment marks & result. BECE 142 Solved Assignment 2022-23 All this is available in an online mode. After submitting the assignment, you can check you IGNOU Assignment Status only after 3-4 weeks. It might take 40 days to declare.

BECE 142  Solved Assignment 2022-23 Here the students can check their IGNOU Assignment Status, marks, result or both the sessions i.e; June & December.

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