Given the following 3 equations: $$ Y^*_t=100+3t \\ Y_t = Y_t^* (1+(0.2 (\sin t)) \\ B_t=B_t^* (1+(0.4 (\sin t)) \\ $$ And take B* to be the following, but is unknown: $$ B_t^*= \alpha Y_t^* \\ $$ I've figured the best way to estimate B* is the following: $$ \hat{B} _t^*=B_t (Y_t^*/Y_t )^{0.4/0.2} \\ $$ But I can't figure how it works. Can anyone provide a step-by-step? Also why is it not a perfect estimate?

3 knowns

enter image description here

Estimate of unknown

enter image description here


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.