I am taking my first undergrad econometric class and need suggestions for models. I need a multivariable model with 3-4 independent variables. I am having a hard time thinking of one that will not have a lot of serial correlation or multicollinearity. Any advice is appreciated. Thanks in advance.
ThatGuy
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How about estimating a cost function of the form: ln C = B1 + B2 ln Y + B2 ln w + B3 ln r + e, where C is total cost, Y is output, w is wages, and r is the rental cost of capital, and e is a stochastic error term that is normally distributed with mean 0 and some finite variance. Note that this functional form assumes the underlying production function is Cobb Douglas.
oroza
Econometrics is excited by the initiatives of springing up and using quantitative or statistical elementary strategies to the study and elucidation of economic concepts. Econometrics combines economic theory with data to examine and attempt economic relationships.