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Econometrics

Using a dataset on the demand of vehicles in South Africa for the year 2017, an Econometrician has estimated a model to analyse the effect of disposable income and the exchange rate on the expenditure of vehicles. The dataset has the following variables: The following regression results are obtained: Regression Statistics
a. Present the estimated regression equation. b. Interpret the coefficients for Randvalue and disine. (6) c. In testing the model, there is a finding that the variance inflation factor is 19. Which estimation problem could the model be suffering from? Briefly explain the nature of this problem.
d. Discuss 3 remedial measures that may be implemented to correct for the problem identified in c. (9) e. Which other important variable do you think should be included in the model? Explain you answer. f. Calculate the $R_{2}$ and interpret it. (3) (5) g. Comment on the significince of the coefficients. (5)

solution ....>

a.

The estimated regression equation is:

as given by

b.

Randvalue's coefficient is stat...

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