ECONOMIC CONSULTING: Case Study

  1. Review the Bulgari BALI and RC hotel (AYANA Resort) BALI by visiting their respective websites. Describe any stylized differences that are apparent to you in a brief fashion. How many rooms and villas are at each property at present?(1 pt)
  2. Discuss two weaknesses of the Owsley report (main and supplemental). Discuss two weaknesses of the Dubin report (main and supplemental).(4 pts)
  3. Locate data for tourist arrivals to Bali since 2005. Cite a website for this. ( 1 pts)
  4. Could exchange rate fluctuations affect the regression models offered by Dr. Dubin in the Bali case? Hint: if explain rate fluctuations were not included in the regression models by Dubin (or by Owsley), should they have been included and how should they have been included?(4 pts)
  1. Omitted variable bias.

Suppose that true model is

The model Mr. Owsley estimated was

where is the number of tourist arrivals to Bali. is the month number in Mr. Owsley’s reports. It acts like “trend” in Canada Post and is essentially the observation number . (Subscript here refers to omitted variable bias)

 

If we ignore and and a simple version of true model is , and then we can get

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