Posted: December 3rd, 2015
Economics
Wildcats are wells drilled to find and produce oil and/or gas in an improved area
or to find a new reservoir in a field previously found to be productive of oil or
gas or to extend the limit of a known oil or gas reservoir.
The variables in the table are defined as follows:
Y = the number of wildcats drilled
X2 = the price of the wellhead in the previous period
(In constant dollars: 1980 = 100)
X3 = domestic output
X4 = GNP at constant dollars (1980 = 100)
X5 = trend variable, 1948 = 1, 1949 = 2, …1978 = 31
Consider the regression model based on this equation:
Yt = b1 + b2X2t + b3X3t + b4X4t + b5X5t + u t — (1)
(a) Run the regression equation (1) above in EViews 8 and show the regression
result.
[3 marks]
(b) Explain the regression equation (1) above in terms of economic
relationship between the dependent and independent variables. State and explain the
expected signs of the coefficients of this model?
[5 marks]
(c) Interpret the OLS regression results shown above in terms of:
(i) Economic interpretation of the results.
[8 marks]
(ii) Econometric/statistical interpretation of the results.
[6 marks]
(d) Are the empirical results in accordance with prior expectations? Explain
[3 marks]
[Total marks: 25
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