You have n- 28 quarterly observations on the imports M of a country, an index of

Question

You have n- 28 quarterly observations on the imports M of a country, an index of import price PM, and real aggregate income GDP. Adding dummy variables Q2, Q3, and Q4 for the 2nd , 31d, and 4th of the year you estimate the model and find the following estimates along with their standard errors: logM = 4.30-0.58 log P M + 1.45 logGDP + 0.1502 + 0.10034 0.4004 R. 0.253, n = 28 (0.08) (0.13) 0.21) 0.10 (0.05) (0.12) (14 points) Construct a 95% confidence interval for A and interpret it. Be sure to state precisely the degrees of freedom, t-values, etc. that you use to construct the confidence interval. See the attached table a)

Explanation / Answer

HERE estimated value fo b1 =-0.58

for abvoe std error =0.13

here degree of freedom =n-6=28-6=22

therfore for 22 df and 95% CI critical value of t =2.0739

hence 95% confidence interval =sample mean -/+ t*Std error =-0.8496 to -0.3104

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