2) The effect of minimum wage policies on employment rates is an issue that is commonly raised in policy discussions. The following is a simplified version of model that has been used to explore this relationship in Puerto Rico in the mid-to-late 20th century: In(emprate.) = Bo + B1 In(mwcovt) + B2 In(usgnpti) + &t where: emprater = employment rate in Puerto Rico in year t mwcovt = measure of strength of Puerto Rican minimum wage coverage in year t usgnp. = United States Gross National Product (GNP) in year t a. [10 points] Using data from the file ps3q2.dta, estimate the model above by OLS regression. Use a graph to check for serial correlation, and explain what the graph indicates about this issue. Before proceeding, use the command tsset year to communicate to Stata that this is a time-series dataset in which the year variable identifies the sequence of observations; this will be required for the remaining tasks. b. [5 points] Perform the Durbin-Watson test on the regression from part (a) at the 5% (one-sided) significance level, and interpret the results; the relevant critical values at 5% for the case of 2 regressors and a sample of 38 observations are approximately di. = 1.32 and du = 1.66. th one lag, as shown in