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If there is collinearity in Problem 8.14, estimate the various auxiliary regressions and find out which of the X variables are highly collinear.
Problem 8.14
You are given the annual data in Table 8-5 for the United States for the period 1971 to 1986. Consider the following aggregate demand function for passenger cars:
InYi = B1 + B2InX2t + B3InX3t + B4InX4t + B5InX5t + B6InX6t + ut
where In = the natural log
DEMAND FOR NEW PASSENGER CARS IN
THE UNITED STATES, 1971 TO 1986 |
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