Problems

17.22. Consider the following model:

Y* = a + ft0 Xt + ut where Y* = desired, or long-run, business expenditure for new plant and equipment, Xt = sales, and t = time. Using the stock adjustment model, estimate the parameters of the long- and short-run demand function for expenditure on new plant and equipment given in Table 17.8. How would you find out if there is serial correlation in the data?

See his article, "The Demand for Capital Goods by Manufacturers: A Study of Quarterly Time Series," Econometrica, vol. 30, no. 3, July 1962, pp. 407-423.

Gujarati: Basic I III. Topics in Econometrics I 17. Dynamic Econometric I I © The McGraw-Hill

Econometrics, Fourth Models: Autoregressive Companies, 2004 Edition and Distributed-Lag

Models

710 PART THREE: TOPICS IN ECONOMETRICS

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