(USING RSTUDIO)

CC.txt

EXPEND OWN 9.58 0 9.85 0 15 1 27.78 0 32.78 0 34.13 0 37.58 1 40.83 0 41.19 0 42.62 1 42.69 0 43.34 1 49.56 0 52.58 0 53.65 0 56.15 0 63.92 0 65.25 1 68.38 0 73.18 0 78.87 1 79.51 0 83.08 0 92 0 93.11 0 93.2 0 95.8 0 98.46 0 101.68 0 104.54 0 105.04 0 108.61 0 124.98 1 129.37 0 137.87 0 150.79 1 165.85 0 169.89 0 170.64 0 186.35 0 215.07 0 218.52 1 222.54 0 234.05 0 235.57 1 248.72 1 251.52 1 256.66 1 258.55 0 292.66 0 306.03 0 308.05 1 310.94 1 319.49 0 335.43 1 344.47 0 405.35 1 417.83 0 451.2 1 474.15 1 502.2 0 541.3 1 546.5 1 548.03 1 552.72 1 568.77 1 642.47 0 644.83 1 777.82 1 810.39 0 1532.77 1 1898.03 0

1. Use the data from cc.txt to complete the following: (a) Compute the sample correlation between OWN and EXPEND. (b) Multiply your result from (a) by EXPEND,n/OWN,n, where D n is the sample standard deviation of EXPEND, and dowN,n is the sample standard deviation of OWN. (c) How does your result from (b) compare to the OLS estimate of 2 from the model EXPEND, A + 20wNit U.? (HINT: We found this estimate in ecn723-04.pdf.) (d) Multiply your result from (a) by owN,n/EXPEND.n. (e) How does your result from (c) compare to the OLS estimate of a2 from the model OWN 1. Use the data from cc.txt to complete the following: (a) Compute the sample correlation between OWN and EXPEND. (b) Multiply your result from (a) by EXPEND,n/OWN,n, where D n is the sample standard deviation of EXPEND, and dowN,n is the sample standard deviation of OWN. (c) How does your result from (b) compare to the OLS estimate of 2 from the model EXPEND, A + 20wNit U.? (HINT: We found this estimate in ecn723-04.pdf.) (d) Multiply your result from (a) by owN,n/EXPEND.n. (e) How does your result from (c) compare to the OLS estimate of a2 from the model OWN