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# ECO601 Business Econometrics Assignment No 01 Fall 2019 Solution & Discussion Due Date: 21-11-2019

ECO601 Business Econometrics Assignment No 01 Fall 2019 Solution & Discussion Due Date: 21-11-2019

ECO601 BUSINESS ECONOMETRICS Assignment 1 Solution/Discussion Fall 2019

SEMESTER FALL 2019

# ASSIGNMENT

DUE DATE: 21ST NOVEMBER, 2019

MARKS: 10

The Case:

Expansionary monetary policy didn’t play its role effectively in the increase in exports as it was expected to be done similar in 2013-2014.  The present government of Pakistan is trying its best to increase the exports and reduce the imports. For this purpose, government uses the tight monetary policy. Government increases the interest rate and also tries to bring the exchange rate at adjustable position. Remittances also play vital role in decreasing current account deficit. Remittances and Exports play role to increase the economic growth of the country. In this assignment, Growth rate is taken as a function of exports, remittances, and Capital .In order to find out the effect of these variables on Growth rate, following model has been proposed for estimation:

Growth rate = β0 + β1 (Exports) + β2 (Remittances) + β3 (Capital) +    ………….  (1)

Model (1) can also be written as:

……………  (2)

In model (2):

: Real GDP Growth Rate (Percent)

: Exports of Principal Commodities (Million Dollars)

: Workers’ Remittances (Million Dollars)

: Gross Fixed Capital Formation (Million Rupees)

: Intercept term

: Error term

: Slope Coefficients.

Data on these variables is taken from 1995 to 2015. Data has been taken from State bank of Pakistan website”.

 Years Economic Growth (GDP) Exports (E) Workers’ Remittances (R) Gross Fixed Capital Formation (K) 1995 4.1 8,137.2 1,866.10 317,845 1996 6.6 8,707.1 1,461.17 368,424 1997 1.7 8,320.3 1,409.47 396,859 1998 3.5 8,627.7 1,489.55 402,845 1999 4.2 7,779.3 1,060.19 409,357 2000 3.9 8,568.6 983.73 607,410 2001 2.0 9,201.6 1,086.57 659,325 2002 3.1 9,134.6 2,389.05 680,373 2003 4.7 11,160.2 4,236.85 736,433 2004 7.5 12,313.3 3,871.58 844,836 2005 9.0 14,391.1 4,168.79 1,134,942 2006 5.8 16,451.2 4,600.12 1,711,522 2007 5.54 16,976.2 5,493.65 1,960,232 2008 4.99 19,052.3 6,451.24 2,066,941 2009 0.36 17,688.0 7,811.43 2,263,636 2010 2.58 19,290.0 8,905.90 2,504,231 2011 3.62 24,810.4 11,200.97 2,288,325 2012 3.84 23,624.3 13,186.62 2,701,458 2013 3.65 24,460.5 13,921.66 2,990,126 2014 4.03 25,109.6 15,837.71 3,354,999 2015 4.24 23,667.3 18,720.00 3,701,627

Requirements:

Using above information, estimate the multiple regression model by using Microsoft Excel Data Analysis Tool and find out as well as interpret coefficients and R square value:

1. Coefficients (β0, β1, β2, β3)
2. R square
4. Calculate F-value

## Marks: (4 + 2 + 2 +2)

Note:           You   are     required      to       give           interpretation       of       required regression/estimation results in tabular form given below:

Dependent Variable:  Growth Rate (

 R square value R square interpretation Adjusted R square value F-value

IMPORTANT:

24 hours extra / grace period after the due date are usually available to overcome uploading difficulties. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.

OTHER IMPORTANT INSTRUCTIONS:

• Make sure to upload the solution file before the due date on VULMS.
• Any submission made via email after the due date will not be accepted.
• FORMATTING GUIDELINES:
• Use the font style “Times New Roman” or “Arial” and font size “12”.
• You may also compose your assignment in Open Office format.
• Use black and blue font colors only.

RULES FOR MARKING

• It is submitted after the due date.
• The file you uploaded does not open or is corrupt.
• It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
• It is cheated or copied from other students, internet, books, journals etc.

Dear students!

As you know that Pre Mid-Term semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.

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