SEMESTER FALL 2019

BUSINESS ECONOMETRICS (ECO601)

ASSIGNMENT
DUE DATE: 21ST NOVEMBER, 2019
MARKS: 10

The Case:
Expansionary monetary policy didn’t play its role effectively in the increase in exports as
it was expected to be done similar in 2013-2014. The present government of Pakistan is
trying its best to increase the exports and reduce the imports. For this purpose,
government uses the tight monetary policy. Government increases the interest rate and
also tries to bring the exchange rate at adjustable position. Remittances also play vital
role in decreasing current account deficit. Remittances and Exports play role to increase
the economic growth of the country. In this assignment, Growth rate is taken as a
function of exports, remittances, and Capital .In order to find out the effect of these
variables on Growth rate, following model has been proposed for estimation:

Growth rate = β0 + β1 (Exports) + β2 (Remittances) + β3 (Capital) + …………. (1)

Model (1) can also be written as:

…………… (2)

In model (2):

: Real GDP Growth Rate (Percent)

: Exports of Principal Commodities (Million Dollars)

: Workers’ Remittances (Million Dollars)  

: Gross Fixed Capital Formation (Million Rupees)

: Intercept term

: Error term
 , : Slope Coefficients.

Data on these variables is taken from 1995 to 2015. Data has been taken from “State
bank of Pakistan website”.

Workers’ Gross Fixed

Economic Exports Remittances Capital
Years Growth (GDP) (E) (R) Formation (K)

1995 4.1 8,137.2 1,866.10 317,845

1996 6.6 8,707.1 1,461.17 368,424

1997 1.7 8,320.3 1,409.47 396,859

1998 3.5 8,627.7 1,489.55 402,845

1999 4.2 7,779.3 1,060.19 409,357

2000 3.9 8,568.6 983.73 607,410

2001 2.0 9,201.6 1,086.57 659,325

2002 3.1 9,134.6 2,389.05 680,373

2003 4.7 11,160.2 4,236.85 736,433

2004 7.5 12,313.3 3,871.58 844,836

2005 9.0 14,391.1 4,168.79 1,134,942

2006 5.8 16,451.2 4,600.12 1,711,522

2007 5.54 16,976.2 5,493.65 1,960,232

2008 4.99 19,052.3 6,451.24 2,066,941

2009 0.36 17,688.0 7,811.43 2,263,636

2010 2.58 19,290.0 8,905.90 2,504,231

2011 3.62 24,810.4 11,200.97 2,288,325

2012 3.84 23,624.3 13,186.62 2,701,458

2013 3.65 24,460.5 13,921.66 2,990,126

 2014 4.03 25,109.6 15,837.71 3,354,999

2015 4.24 23,667.3 18,720.00 3,701,627

Requirements:
Using above information, estimate the multiple regression model by using Microsoft
Excel Data Analysis Tool and find out as well as interpret coefficients and R square
value:

1. Coefficients (β0, β1, β2, β3)

2. R square
3. Adjusted R square
4. Calculate F-value

Marks: (4 + 2 + 2 +2)

Note: You are required to give interpretation of required

regression/estimation results in tabular form given below:

Dependent Variable: Growth Rate ( )

Independent Coefficients (values) Interpretation

Variables

Intercept
 R square value

R square
interpretation

Adjusted R square
value

F-value

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