Answer all the given problems. Section A to be answered in around 500 words each and Section B to be answered in around 300 words.
problem1: What is meant by the term autocorrelation? What are its major consequences? How do you detect it?
Describe one of the techniques for eliminating the problem of autocorrelation.
a) Differentiate between structural form and reduced form of a simultaneous equation system.
b) Describe the concept of identification in a simultaneous equation system.
c) Describe the ‘rank’ and ‘order’ conditions for identification of an equation in a simultaneous equation system.
problem 3: What is meant by the term heteroscedasticity? Describe one of the methods you would follow to eliminate the problem of heteroscedasticity.
problem 4: What is the requirement for using a dummy variable in a regression model? Differentiate between intercept dummy and slope dummy with an illustration. What is dummy variable trap?
problem 5: What are the various uses of Chow test? prepare down the steps you would follow in applying the Chow test.
problem 6: Prove that OLS estimators are best linear unbiased estimators (BLUE).
problem 7: prepare short notes on the given:
a) Simultaneity bias
b) Multi-collinearity problem