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Part 111: Empll'lcal problem (55 points in total, 32% of the entire exam) Agriculture is a major source of income in many developing countries, and
Part 111: Empll'lcal problem (55 points in total, 32% of the entire exam) Agriculture is a major source of income in many developing countries, and plays a crucial role in food security and poverty reduction. This question asks you to investigate the effect of agricultural credit accessibility on household income in rural areas in the developing world. You have access to a data set of 9,135 agricultural households in rural Africa. This data set contains information on each household's access to credit measured by the largest amount of money that the household can borrow annually (variable credit; measured in tens of U.S.D.), and the annual income growth of that household (variable income; measured in percent). You then run a regression of income on credit. The STATA output is presented below: . reg income credit Source I SS df MS Number of obs = 9135 + E'(1, 739) = 164.72 Model | 678.68578 1 678.68578 Prob > F = 0.0000 Residual | 3044.92826 739 4.12033593 R-squared = 0 1823 +--------- Adj R-squared = 0.1812 Total | 3723.61404 740 5.03191086 Root MSE = 2.0299 income I Coef. Std. Err. t P>|t\\ [95% Conf. Interval] + _ _ _ _ _ credit | .2901432 .0226071 12.83 0.000 .2457615 .334525 _cons | 10.64956 .2427211 43.88 0.000 10.17306 11.12607 1. Write down the population regression model, being as specic as possible. (5 points)
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