got a question on econometrics...

[demyan]

Guys, I have a question on economics, this is for the econometrics course. You know that there is an interdependence between GDP and consumption: there are at least two formulas confirming this: C = C0 + c*Y and Y = C+I+G+NX. In this case it's called a simultaneous equation bias, you see they are dependent on each other in these equations.
The question is if there are any other variables affecting consumption (except gov. purchases, Investment and net exports as they are the elements of GDP here)?
I could think it over, merely I don't have time for this - there are some other more urgent issues I gotta make. Hope you'll help.
Many thanks beforehand.

[chicagoan]

Guys, I have a question on economics, this is for the econometrics course. You know that there is an interdependence between GDP and consumption: there are at least two formulas confirming this: C = C0 + c*Y and Y = C+I+G+NX. In this case it's called a simultaneous equation bias, you see they are dependent on each other in these equations.
The question is if there are any other variables affecting consumption (except gov. purchases, Investment and net exports as they are the elements of GDP here)?
I could think it over, merely I don't have time for this - there are some other more urgent issues I gotta make. Hope you'll help.
Many thanks beforehand.

I don't remember the first formula, but GDP=Y=C+I+G+X (sometimes NX) that is all. What are you looking for? C there is household consumption.


mr

[demyan]

I've found the answer, but thanks anyway.
You know, after some thinking it follows that the bias I mentioned there was unnecessary - the instructor was simply trying to confuse us (but both equations exist. I wonder why you don't know the first one).
The variables are MPC and taxes.
Thank you.

[Proxyman]

These are variables most frequently used in modeling consumption according to HENDRY (dropping model):

share price index CDAX for example
IR = money market rate reported
Y = households disposable income, bln
SD = savings deposits of non-banks in savings banks, bln
G = government consumption, bln
C = private consumption, bln
UR = unemployment rate
SsfE = social security funds expenditure
GE = government expenditure
CPI = price index for private consumption
GDP def = price index, GDP

[Proxyman]

I donot think you have a simultaneity bias in there because you have only one theoretical relationship (in your structural model) and I donot see the endogoneity problem there.

[Doni_usa]

what software do you use for running your regressions?
I use Shazam v.9, sometimes Minitab...never used excel though

[demyan]

what software do you use for running your regressions?
I use Shazam v.9, sometimes Minitab...never used excel though

I always use STATA. Though it's not available now..

[ilhomsher]

For such models one should use Arellano Bond model 1 step estimation, which can be done in either Stata or PcGive