Assignment Task
BASIC ECONOMETRICS Project Paper
The worldwide increase of fish consumption requires alternatives to supply the seafood market and aquaculture has been responsible for this supply with growth from 7% to 48.4?tween 1974 and 2009. Fish prices have become a concern. Many factors have affected the fish prices. Wave height and windspeed are two major factors that have been identified in the research field. The file FISH.xlsx contains 97 daily price and quantity observations on fish prices for Asian buyers (Asians) and white buyers (whites) at the Fulton Fish Market in New York City. Based on the data set given, answer the following questions with the EViews software. A list of data description displayed in Appendix. Display your solutions with EViews’s output/ screenshot.
a) Regress log(avgprc) on four daily dummy variables, with Friday as the reference category. Use the variable log(avgprc) as the dependent variable. Include a linear time trend (T). Set your null and alternative hypotheses appropriately. Is there evidence that price varies systematically within a week at a 1 percent significance level?
b) Now, add the variables wave2 and wave3, which are measures of wave heights over the past several days. Set your null and alternative hypotheses appropriately. Are these variables individually statistically significant at a 5 percent significance level? Is the model correctly specified statistically? Describe a mechanism by which stormy seas would increase the price of fish.
C) Next, the analyst focuses on the disaggregate level. Estimate the fish price model for Asian buyers and fish price for the white buyers separately with EViews. Include a linear time trend, wave2, wave3, and natural logarithm of your dependent variables. Let say there is an impact of wind speed on fishing effort. Now, add the variable speed2 as an additional exogenous variable in the model for Asians and whites, which is measures the past 2 days wind speeds. Write down all your estimated models for Asian and white buyers.Which model is the better model for Asians and whites buyers, respectively? Original model (without the variable speed2) or model with the variable speed2? Justify your choice based on model selection criteria and appropriate diagnostic tests (including heteroscedasticity test, model misspecification test, normality test). (15 markah/marks)
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