THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
Consider the following model: Y = β₀ + β₁X₁_t + β₂X₂_t + γ₃Y_t_-1.Using a sample of 36 months,we estimate this model and obtain the following results: y_t = 1.33 + 17.6x₁_t + 0.94x₂_t+ 0.39Y_t_-1
-If X₁ were to increase by 1-unit in time t,by how much would we expect Y to change over all current and future time periods as a result of this increase?

Question

Quizplus · Accepted Answer

According to the given regression results, the coefficient of the variable X₁ is 17.6. This means that a unit increase in X₁ will result in a 17.6-unit increase in y_t, holding all other variables constant. Therefore, if X₁ were to increase by 1-unit in time t, we would expect Y to change by 17.6 units in all current and future time periods.