Monday, July 30, 2007

not quite sure of the maths...

So we have to buy $20 billion worth and they just get $30 billion? [link]

5 comments:

Hasan said...

I tried regressions..
I tried deviations..

Can't figure it out, either.

Notes from behind the bike shed said...

...The Monte Carlo plug-ins crashed on me again...

Hasan said...

Oh no - but the Monte Carlo plug-ins never failed before..

.. and Black-Scholes doesn't seem to fit in either.


This really is one of those things that make you go "hmm", I guess.

Notes from behind the bike shed said...

seems to be a lot of hmmm'ing going on, don't you think

BB said...

Well here's the solution. The parameters are already constrained/fixed/pre-determined exogenously, so we have

US military sales = [israeliAID + 0.66*arabmilitarysales] + beta*othersales + error

Obviously the model has a high variance at the moment as the exogenous factors such as US enemy threats (iran) are quite high at the moment