In a study on determinants of private investment, the following estimation results were obtained based on annual data for the period 1970-2010 Model 1 Í, = 10.0231 – 7.3164 Y, + 0.8478 r, + 0.9915 G, standard error: (9.2568) (0.1298) (0.2701) (0.4016)
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R = 0.8791 Model 2 in Í, = 1.5321 + 0.5326 In Y, - 0.1125 Inr, - 0.2647 In G, p-value : (0.065) (0.045) (0.031) (0.047)
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R=0.8031 where: Iₜ= private investment (RM millions) Yₜ = gross domestic product (RM millions) rₜ= interest rate (%) Gₜ = public investment (RM millions) In = natural logarithm a) Interpret the slope coefficients of variable Y, andre for both models b) For Model 1, test whether the slope coefficient of Y is statistically different from zero at 5% level of significance using confidence interval approach. c) For Model 2, test whether the slope coefficient of G is statistically different from zero at 5% level of significance. d) Justify why the slope coefficient of variable G in Model 2 has a negative sign. e) Should Model 1 be chosen for analysis purposes? Give two (2) reasons and explain f) Test the overall significance for Model 2 at 5%