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Data and Packages: We use the dataset MASchools in the package AER like we did in R-Exercise 2. The dataset contains information on test performance,
Data and Packages: We use the dataset "MASchools" in the package "AER" like we did in R-Exercise 2. The dataset contains information on test performance, school characteristics and student demographic backgrounds for school districts in Massachusetts (MA). In this exercise, we shall use R-functions in the packages "estimate" and "AER" (or "car"). We wish to learn the effect of student-teacher ratio (STR) on the 4th grade score (TestScore), which is defined as the sum of math, English, and science. In order to control for omitted variable bias, we shall include a few other additional variables and consider various functional forms. For all estimation exercises here the type of standard error should be "HC1" or equivalently "stata".QUESTION 1 Estimate the population regression model: TestScore, =B + B STR. + B,Income, + B Lunch , tu; where E[u ISTR ]=0. Here, Income and Lunch, are the per capita income and percentage of qualified students for reduced-price lunch in school district i. What is the t value for the OLS estimate of the slope coefficient on STR (two decimal places)
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