Question
There are 6660 observations of data on houses sold from 1999-2002 in Stockton California in the file hedonic1.xls. Use the data of 2001 only to
There are 6660 observations of data on houses sold from 1999-2002 in Stockton California
in the file "hedonic1.xls". Use the data of 2001 only to estimate the next linear model and
answer the associated questions below.
LSP = ? 01 + ? 02 SFLA + ? 03 BEDS + ? 04 BATHS + ? 05 STORIES
+? 06 VACANT + ? 07 AGE + u, (1)
where u is an error term. Note that the sub-index i of each variable has been suppressed in the
above equation.
LSP = ln(Selling Price), which is a function of:
? SFLA - Size of Living Area (in square feet)
? BEDS - Number of Bedrooms
? BATHS - Number of Bathrooms
? STORIES - Number of Stories
? VACANT - Vacancy Status (1 if vacant, 0 if not at the time of the sale)
? AGE - Age of the House in Years
1
Questions: (20 marks in total)
1. Calculate the descriptive statistics for LSP and all explanatory variables (i.e., 7 VARI-
ABLES IN TOTAL), and report them in a table. (2 points)
2. Estimate the above hedonic model for the houses sold from in Stockton California.
(a). Write down the estimated model (including estimates of the coefficients and the
associated standard deviations, and R 2 at least).
- (b). Discuss the estimation results using Goodness of fit.
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