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2. On Model Specification: We are interested in studying whether a mother's smoking affects the birthweight of her baby. Consider the following two models: Model
2. On Model Specification: We are interested in studying whether a mother's smoking affects the birthweight of her baby. Consider the following two models: Model 1: y = x3*+ a . MITE, Model 2: y = xB* + a . In(MI) + E, where y is the birthweight of the baby, x is a vector including some regressors, MI stands for the monthly income of the mother, & is the error term, and S* and a include the corresponding coefficients. (a). Derive the elasticity of birthweight with respect to the mother's monthly income for the Model 1. (b). Derive the elasticity of birthweight with respect to the mother's monthly income for the Model 2
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