Monthly Archives: August 2015

CLRM – Assumption 1: Linear Parameter and correct model specification

Assumption 1 requires that the dependent variable is a linear combination of the explanatory variables and the error terms . Assumption 1 requires the specified model to be linear in parameters, but it does not require the model to be … Continue reading

Posted in Econometrics | 8 Comments

Capital Adjustment Costs

Understanding investment activity in an economy is not trivial. The erratic nature of firm level investment activity is somewhat of a mystery to me and it took me quite some time to get a vague idea of what could be … Continue reading

Posted in Macroeconomics | Tagged , | 1 Comment