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# F- Test Applications - PowerPoint PPT Presentation

F- Test Applications. Time Series Applications. Chow Test for structural change. Actual, Fitted, Residual graph. The Gann Initiative. 1977-Limit Government in Real Terms Per Capita Two periods 1968-69 through 1977-78 1978-79 through 2007-08. Genr periodone=0, type in ones

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### F- Test Applications

• Chow Test for structural change

• 1977-Limit Government in Real Terms Per Capita

• Two periods

• 1968-69 through 1977-78

• 1978-79 through 2007-08

Genr periodtwo=1, type in zeros

Genr timetwo=periodtwo*time

• Ratio = c(1)*periodone + c(2)*timeone + c(3)*periodtwo + c(4)*timetwo +e(t)

• F2, 36 = [SSR2 - SSR4 ]/2 ÷ SSR4/(40-4)

• F2, 36 = [13.31 – 7.40]/2 ÷ 7.40/36

• F2, 36 = 2.96/0.206 = 14.4

Genr: [email protected](Fvar, 2, 36)

• Yes, there is a significant increase in explained variance, indicating a structural change after the passage of the Gann Initiative in 1977

Alternatively, can you estimate a single time trend instead of two time trends?

• No, two time trends fits the data significantly better

Wald Test of two time trends?