This question assumes access to a nonparametric density estimation program. Use the Section 4.6.4 data on health

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This question assumes access to a nonparametric density estimation program. Use the Section 4.6.4 data on health expenditure. Use a kernel density estimate with Gaussian kernel (if available).

(a) Obtain the kernel density estimate for health expenditure, choosing a suitable bandwidth by eyeballing and trial and error. State the bandwidth chosen.

(b) Obtain the kernel density estimate for natural logarithm of health expenditure, choosing a suitable bandwidth by eyeballing and trial and error. State the bandwidth chosen.

(c) Compare your answer in part

(b) to an appropriate histogram.

(d) If possible superimpose a fitted normal density on the same graph as the kernel density estimate from part (b). Do health expenditures appear to be log-normally distributed?

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Microeconometrics Methods And Applications

ISBN: 9780521848053

1st Edition

Authors: A.Colin Cameron, Pravin K. Trivedi

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