(50 points) The file Corruption.xls contains country-level data on two variables.
these is a measure of perceptions of political corruption.
(This data is assembled by the
organization Transparency.org.) [NOTE: The least corruption possible has a measure of 0, the
highest a measure of 10.] The second variable is a measure of GDP per capita.
(10) Before looking at any data, propose a simple economic story (model) for how these
two variables might be related.
Write a paragraph of no less than 50 words in which you
explain your argument.
Which is the independent, and which is the dependent variable in
your model? (Plausible stories could be told in which either variable could be the
independent (or dependent) variable.)
(20) Whichever way you’ve chosen to model this problem, execute a linear regression.
For one time in your life, you are going to be calculating the slope and intercept
estimators in EXCEL (or Google Spreadsheet)
using the “by hand” method that was
demonstrated in the lectures