Questions and Answers of Econometrics

Let's investigate the possibility of heteroskedasticity in time-series data by looking at a model of the black market for U.S. dollars in Brazil that was studied by R. Dornbusch and C. Pechman. In
Suppose that you€™re interested in the effect of price on the demand for a €œsalon€ haircut and that you collect the following data for four U.S. cities for 2003:and
The discussion of random assignment experiments in Section 16.1 includes models both with (Equation 16.2) and without (Equation 16.1) two additional observable factors (X1 and X2). In contrast, the
James Stock and Mark Watson suggest a quite different approach to heteroskedasticity. They state that “economic theory rarely gives any reason to believe that the errors are homoskedastic. It
As an example of impure serial correlation caused by an incorrect functional form, let€™s return to the equation for the percentage of putts made (Pi) as a function of the length of the
Your friend is just finishing a study of attendance at Los Angeles Laker regular-season home basketball games when she hears that you€™ve read a chapter on serial correlation and asks your
Recall from Section 9.5 that switching the order of a data set will not change its coefficient estimates. A revised order will change the Durbin€“Watson statistic, however. To see both
In 1998, Mark McGwire hit 70 homers to break Roger Maris€™s old record of 61, and yet McGwire wasn€™t voted the Most Valuable Player (MVP) in his league. To try to understand how
A researcher once attempted to estimate an asset demand equation that included the following three explanatory variables: current wealth Wt, wealth in the previous quarter Wt-1, and the change in
V. N. Murti and V. K. Sastri investigated the production characteristics of various Indian industries, including cotton and sugar. They specified Cobbâ€“Douglas production functions for output
In an effort to explain regional wage differentials, you collect wage data from 7,338 unskilled workers, divide the country into four regions (Northeast, South, Midwest, and West), and estimate the
Look over the following equations and decide whether they are linear in the variables, linear in the coefficients, both, or neither:a. Yi = β0 + β1X3i + εib. Yi = β0 + β1ln Xi + εic. ln Yi =
Let€™s return to the model of Exercises 3-7 and 5-8 of the auction price of iPods on eBay. In that model, we used datafile IPOD3 to estimate the following equation:Where:PRICEi = the price
Let’s return to the model of financial aid awards at a liberal arts college that was first introduced in Section 2.2. In that section, we estimated the following equation (standard errors in
Consider the following annual model of the death rate (per million population) due to coronary heart disease in the United States (Yt):Where:Ct = per capita cigarette consumption (pounds of tobacco)
Frederick Schut and Peter VanBergeijk16 published an article in which they attempted to see if the pharmaceutical industry practiced international price discrimination by estimating a model of the
Suppose that you€™ve been asked by the San Diego Padres baseball team to evaluate the economic impact of their new stadium by analyzing the team€™s attendance per game in the last
Using the techniques of Section 5.3, test the following two-sided hypotheses:a. For Equation 5.8, test the hypothesis that:H0: 2 = 160.0HA: 2 ≠ 160.0at the 5-percent level of significance.b.
Create null and alternative hypotheses for the following coefficients:a. The impact of height on weightb. All the coefficients in Equation A in Exercise 5, Chapter 2c. All the coefficients in Y = β0
In Hollywood, most nightclubs hire €œpromoters,€ or people who walk around near the nightclub and try to convince passersby to enter the club. One of the nightclub owners asked a
Which of the following pairs of independent variables would violate Assumption VI? (That is, which pairs of variables are perfect linear functions of each other?)a. Right shoe size and left shoe size
Let’s get some more experience with the six steps in applied regression. Suppose that you’re interested in buying an Apple iPod (either new or used) on eBay (the auction website) but you want to
The Graduate Record Examination (GRE) subject test in economics was a multiple-choice measure of knowledge and analytical ability in economics that was used mainly as an entrance criterion for
Do liberal arts colleges pay economists more than they pay other professors? To find out, we looked at a sample of 2,929 small-college faculty members and built a model of their salaries that
Suppose that you work in the admissions office of a college that doesn€™t allow prospective students to apply by using the Common Application.9 How might you go about estimating the number
Suppose that you have been asked to estimate a regression model to explain the number of people jogging a mile or more on the school track to help decide whether to build a second track to handle all
Consider the following two least-squares estimates of the relationship between interest rates and the federal budget deficit in the United States:Model A: Ŷ1 = 0.103 - 0.079X1 R2 = .00Where:Y1 =
Let’s return to the wage determination example of Section 1.2. In that example, we built a model of the wage of the ith worker in a particular field as a function of the work experience, education,
If an equation has more than one independent variable, we have to be careful when we interpret the regression coefficients of that equation. Think, for example, about how you might build an equation

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