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(a) Estimate the following regression Growth = Bo+ B,TradeShare + $2 YearsSchool + B3Rev_Coups + BAAssassinations + u Rank the independent variables according to their
(a) Estimate the following regression Growth = Bo+ B,TradeShare + $2 YearsSchool + B3Rev_Coups + BAAssassinations + u Rank the independent variables according to their importance. (b) Now create a new variable YearsSchool in STATA by "gen yearsschool2=yearsschool^2" and estimate the following regression Growth = Bo+ B,TradeShare + $2 YearsSchool + 83 YearsSchool + BARev_Coups + ByAssassinations + u Rank the independent variables according to their importance. Do you see any difference in ranking between (a) and (b). (c) Use the estimated regression from (b) and test the null hypothesis: 8, = 2 against the alternative hypothesis: B, * B2- (i.e., the effect of TradeShare on Growth = the effect of YearsSchool on Growth under the null hypothesis). Use a significance level=0.05. (d) Use the estimated regression from (b) to predict the average annual growth rate for a country that has average values for all regressors
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