![]() For example, is the extra consulting money earned this year going to continue next year? Also, lagged values of real disposable income appear in the regression equation because the consumer takes into account his life time earnings in trying to smooth out his consumption behavior. This is true in the permanent income theory of consumption, where it may take the consumer several periods to determine whether the change in real disposable income was temporary or permanent. Investigating ARLD (autoregressive distributed lag model model) through VAR (vector autoregression) in EViews: In order to investigate ARLD model by the help of vector autoregression in Eviews, you need to follow bellow steps: 1. In studying consumption behavior, a change in income may affect consumption over several periods. It takes time before investment in research and development pays off in new inventions which in turn take time to develop into commercial products. Therefore, the effect of this public investment on growth in GNP will show up with a lag, and this effect will probably linger on for several years. ![]() For example, it takes time to build roads and highways. EViews makes it easy to lag variables in an equation.2 Equations 6.22 & 6.23 refer to a. ![]() Many economic models have lagged values of the regressors in the regression equation. VAR (Vector Autoregression), Vector/Row, and Vector Scalar. ![]()
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