Question

7. If a researcher is considering whether to use distributed lags or proceed with a dynamic model, discuss the considerations to use one or the other

Answer 1

Distributed-Lag Models:- A distributed-lag model is a dynamic model in which shows the impact of a regressor x on y happens,over time rather than all at once. In the simple case of one explanatory variable and a linear. .
The general form of a distributed lag model is written as  

Xt=Ao+BoXt+B1Xt-1+B2Xt-2+......B5Xt-6+U

Dynamic models are commenly models that have or depend upon an element of time, especially permitting for interactions between variables over time. A different idea with the same name is models that are updated over time with new data. In the case of Systems Dynamics, we often have variables that are plastered.

Distributed lag model better than Dynamic model:-

In distributed lag model is most suitable to calculating dynamic relationships when lag weights decrese to zero relatively fastly, when the regressor is not mostly, autocorrelated, and when the sample is big relative to the length of the lag distribution.