Question
Assignment 3 An internet retailer Strawberry opened its physical store in Massachusetts (MA) in July 1, 2010. By law, customers living in MA need to
Assignment 3 An internet retailer "Strawberry" opened its physical store in Massachusetts (MA) in July 1, 2010. By law, customers living in MA need to pay sales taxes for all the purchases they make through internet since July 1, 2010. However, customers living in the neighboring state (Rhode Island, RI) are not affected by this physical store opening. In other words, they do not have to pay for sales taxes for their purchases through . To identify the effects of sales tax on consumer purchases, Strawberry first identified similar consumers living near the MA-RI border. Then, Strawberry consider the difference-in-differences approach using the data set they compiled: "Assignment_3.csv" Run the following regression and report the followings: Purchasesit = 0 + 1MAi + 2PostPeriodit + 3MAi PostPeriodit + it Note: To run the regression, you need to construct the following two dummy variables: MAi is a dummy variable (1: MA, 0: RI) PostPeriodit is a dummy variable (1: July, August, and September, 0: otherwise) a. Estimated coefficient of 1 with t-value and p-value. What is the interpretation of this result? b. Estimated coefficient of 2 with t-value and p-value. What is the interpretation of this result? c. Estimated coefficient of 3 with t-value and p-value. What is the interpretation of this result? d. Under the parallel-trends assumption, what is the counterfactual purchases in MA after the physical store opening in the absence of its store-opening?
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