Prof. Bryan Caplan

bcaplan@gmu.edu

http://www.gmu.edu/departments/economics/bcaplan

Spring, 1999

HW#4 (due April 26 in class)

Johnston/DiNardo:

Sample problems: (answers pre-provided!): 7.2, 6.1, 9.3

Math problems: 7.3, 7.5, 7.7, 6.2

Additional Computing problems:

1. Use your unemployment/inflation data to check the error terms of the regression u_t=b1+b2i_t+b3i_t-1 for:

a. Heteroscedasticity.

b. Autocorrelation.

2. (Separately) try to correct your results in #1 for detected heteroscedasticity and autocorrelation, using a simple technique suggested in lecture notes. How does the correction change the interpretation of your results?