Monday Dec 12th to Sunday Dec 18th. Late submissions (even for 1 second) receive 0. Your submission must include a rscript that is error-less, with your name/names on top of the script. Not a screenshot but an actual rscript that I can run. All questions must have numbers in the script. EXAMPLE: #Questions 1 Part a:. Note that without the correct rscript I will not grade the submission. If you respond to some questions on paper, PLEASE have a reference to which ques- tion you are responding to with numbers and sub-numbers. For example, if you are responding to question 1 part a, in your response you should start with 1.a. ...Again if you are using RStudio I want the responses to have reference. Important: if you work with classmates you should submit 1 submission. If you collab- orate and do not inform me your score will be 0. ONLY ONE MEMBER SUBMITS AND WRITE THE NAMES OF THE GROUP MEMBERS IN THE COMMENT BOX. The data description is attached along with the data. Questions Follow the instruction above and answer the questions below: Question 1 : (15/100) Question1 part a (5/100): Please refer to the data description, and define vari- ables growth, rgdp60, tradeshare, yearsschool, rev-coups, assassinations; meaning what they are and what is their unit of measurement. 2

Question1 part b (5/100): Provides a summary of the variables mentioned above: min, max, mean, and variance of each variable above. Question1 part b (5/100): How many observations do we have? What is the unit of observations (is it individuals, households, states,...)? Question 2 : (20/100) Question 2 part a (5/100): Run a regression of growth over yearsschool. Question 2 part b (5/100): What is the model and the predicted equations? Question 2 part c (5/100): What is the slope and what is the interpretation of this number? Question2 part d (5/100): Is the slope significant? write down the null and alternative of this hypothesis testing, write down the tstat/zscore formula and calculate it and provide your conclusion with the 2 approaches, tstat/zscore and pvalue approaches. Question 3 : (10/100) Question 3 part a (5/100): Create quadratic and cubic terms for yearsschool, then run a regression of growth over yearsschool, yearsschool2, yearsschool3. Question 3 part b (10/100): Is this a good model or do we have to go with a quadratic or linear relationship between growth and yearsschool? Why? Question 4 : (15/100) Question 4 part a (5/100): Create log of yearsschool and run a single linear-log model of growth over log(yearsschool). Question 4 part b (5/100): What is the predicted slope and what is the interpretation of the slope? (Note it is linear-log so the interpretation is not regular) Question 4 part c (5/100): provide the scatter plot of growth over yearsschool, in- cluding the linear, quadratic, and linear-log fitted equations (3 fitted equations from 2a, 3a, and 4a in one scatter plot). 3

Question 5 : (35/100) Question 5 part a (5/100): Run a regression of growth over yearsschool, yearsschool2,tradeshare, rev-coups, assassinations, rgdp60. Question 5 part b (5/100): What is the model? Question 5 part c (5/100): What is the predicted equation? Question 5 part d (5/100): Among all the coefficients, which ones are significant and which ones are not? WHY? Question 5 part e (10/100): In this model, run an F test checking for the simulta- neous significance of revolutions, insurrections (successful or not), coup detats, and assassinations in the growth of the countries. (Hint: the regression in Question 5 part a is your unrestricted model. Create your restricted model excluding these 2 variables and then run the Ftest. Important: what are the null and alternative of this test, and what is your conclusion? calculate the Ftest on paper and use the table for the critical value. You can then double-check your result with the ANOVA command). Question 5 part f (5/100): In this model (part 5.a ), is the start point of GDP an important factor? meaning, is the variable rgdp60 a significant factor for the average growth of these countries in the upcoming years under analysis? what is the effect?

Documentation for Growth Data Growth contains data on average growth rates over 1960-1995 for 65 countries, along with variables that are potentially related to growth. These data were provided by Professor Ross Levine of Brown University and were used in his paper with, Thorsten Beck and Norman Loayza Finance and the Sources of Growth Journal of Financial Economics, 2000, Vol. 58, pp. 261- 300. Variable Definitions Variable Definition Country_name Name of country growth Average annual percentage growth of real Gross Domestic Product (GDP)* from 1960 to 1995. rgdp60 The value of GDP* per capita in 1960, converted to 1960 US dollars tradehare The average share of trade in the economy from 1960 to 1995, measured as the sum of exports plus imports, divided by GDP; that is, the average value of (X + M)/GDP from 1960 to 1995, where X = exports and M = imports (both X and M are positive). yearsshcool Average number of years of schooling of adult residents in that country in 1960 rev_coups Average annual number of revolutions, insurrections (successful or not) and coup detats in that country from 1960 to 1995 assasinations Average annual number of political assassinations in that country from 1960 to 1995 (per million population) oil = 1 if oil accounted for at least half of exports in 1960 = 0 otherwise

country_name growth oil rgdp60 tradeshare yearsschool rev_coups assasinations India 1.915167928 0 765.9998169 0.140501976 1.450000048 0.13333334 0.866666675 Argentina 0.617645085 0 4462.001465 0.156622976 4.989999771 0.933333337 1.933333278 Japan 4.304759026 0 2953.999512 0.157703221 6.710000038 0 0.200000003 Brazil 2.930096626 0 1783.999878 0.160405084 2.890000105 0.100000001 0.100000001 United States 1.712264895 0 9895.003906 0.160815045 8.659999847 0 0.433333337 Bangladesh 0.708263099 0 951.9998169 0.22145839 0.790000021 0.306481481 0.174999997 Spain 2.880326748 0 3123.001465 0.299405932 3.799999952 0.06666667 1.433333278 Colombia 2.227014303 0 1684.000366 0.31307286 2.970000029 0.100000001 0.766666651 Peru 0.060205959 0 2019.000244 0.324612707 3.019999981 0.266666681 0.566666663 Haiti -0.65793407 0 923.999939 0.324745566 0.699999988 0.374074072 0.200000003 Australia 1.975147367 0 7782.002441 0.329479247 9.029999733 0 0.06666667 Italy 2.932981491 0 4564.000488 0.330021679 4.559999943 0.033333335 1.200000048 Greece 3.224050045 0 2093 0.337879002 4.369999886 0.166666672 0.166666672 France 2.431280851 0 5823.000488 0.339706242 4.650000095 0 0.300000012 Zaire -2.811944485 0 488.9999084 0.352317631 0.540000021 0.148148149 0.055555556 Uruguay 1.025308609 0 3967.999756 0.358856708 5.070000172 0 0.166666672 Mexico 1.973941803 0 2836.000244 0.393250912 2.410000086 0 0.166666672 Pakistan 2.698163033 0 638 0.41760394 0.629999995 0.266666681 0.266666681 Niger -2.751477957 0 531.9998779 0.425837249 0.200000003 0.13333334 0 Bolivia 0.355057806 0 1147.999756 0.43557933 4.679999828 0.970370352 0.200000003 Germany 2.453688145 0 6569.998535 0.442142904 7.639999866 0.06666667 0.233333334 Canada 2.385988474 0 7257.99707 0.444374621 8.069999695 0 0.06666667 United Kingdom 1.962219477 0 6822.999023 0.450546652 7.670000076 0.266666681 0.333333343 New Zealand 1.124131799 0 7960.000977 0.4557693 9.550000191 0 0 Philippines 1.15874064 0 1133 0.468346566 3.769999981 0.733333349 1.033333302 Finland 2.798494339 0 5291.001953 0.473254889 7.510000229 0 0 Venezuela -0.883550763 0 6337.998047 0.484600782 2.529999971 0.266666681 0.100000001 Korea, Republic of 7.15685463 0 904.000061 0.488949597 3.230000019 0.333333343 0.100000001 Guatemala 0.92923063 0 1659.999756 0.509590268 1.419999957 0.540740728 2.466666698 Honduras 0.597784758 0 1038.999878 0.517664552 1.690000057 0.266666681 0.06666667 El Salvador -0.607556105 0 1426.999878 0.527773321 1.700000048 0.633333325 1.733333349 Chile 1.446995378 0 2885.000488 0.534684658 4.989999771 0.166666672 0.466666669 Thailand 4.876695156 0 943 0.543337107 3.450000048 0.400000006 0.033333335 Sweden 1.888134241 0 7592.002441 0.544243515 7.670000076 0 0 Senegal -0.43782407 0 1047.000122 0.550812602 1.620000005 0.033333335 0.06666667 Trinidad and Tobago 1.120786428 0 5627.001953 0.552722335 4.309999943 0.033333335 0 Ecuador 2.388092995 0 1460.999634 0.56064254 2.950000048 0.533333361 0 Denmark 2.179370165 0 6759.999023 0.56074965 10.06999969 0 0 Switzerland 1.421865344 0 9408.99707 0.567130983 6.869999886 0 0 Austria 2.88918519 0 5143.000977 0.575274825 3.650000095 0 0 Zimbabwe 0.838155508 0 988.9998779 0.582814276 1.539999962 0.200000003 0.233333334 Paraguay 2.381931543 0 1176.999878 0.603035331 3.349999905 0.06666667 0.033333335 Costa Rica 1.613696575 0 2096.000244 0.605031252 3.920000076 0 0 Portugal 3.64730978 0 1869 0.613616884 1.940000057 0.233333334 0 Togo 0.46277532 0 366.999939 0.626079738 0.270000011 0.166666672 0.033333335 Iceland 3.012388945 0 4963.998535 0.639484167 5.630000114 0 0 Israel 2.810969353 0 3476.999268 0.646913528 6.989999771 0.06666667 0.200000003 South Africa 0.39202112 0 2191.000244 0.651203632 4.059999943 0.100000001 0.366666675 Norway 3.182493687 0 5610.000488 0.681555152 5.559999943 0 0 Sierra Leone -0.339834213 0 877.999939 0.699432909 0.529999971 0.474074066 0.033333335 Dominican Republic 2.498769045 0 1194.999756 0.704819918 2.380000114 0.300000012 0.200000003 Ghana -0.963162243 0 894 0.729232311 0.689999998 0.437037051 0.100000001 Sri Lanka 2.704598427 0 1258.999878 0.742971599 3.430000067 0.200000003 0.200000003 Taiwan, China 6.624734402 0 1256 0.745497823 3.319999933 0.033333335 0.06666667 Panama 2.02718854 0 1574.999878 0.779847085 4.260000229 0.13333334 0.06666667 Papua New Guinea 1.120371103 0 1235.000122 0.798375845 1.129999995 0.033333335 0 Kenya 1.962509155 0 659.000061 0.814710021 1.200000048 0.033333335 0.144444451 Ireland 3.254493952 0 3310.999023 0.822956383 6.449999809 0 0.06666667 Jamaica 0.417790174 0 1772.999878 0.830238342 2.460000038 0 0.13333334 Netherlands 2.200577259 0 6076.99707 0.834204197 5.269999981 0 0 Cyprus 5.384184361 0 2037.000366 0.979355395 4.289999962 0.100000001 0.166666672 Malaysia 4.114543915 0 1420.000244 1.105364203 2.339999914 0.033333335 0.033333335 Belgium 2.651334524 0 5495.001953 1.115916967 7.460000038 0 0 Mauritius 3.02417779 0 2861.999268 1.127936959 2.440000057 0 0 Malta 6.652837753 0 1374 1.9926157 5.639999866 0 0