Unit 10 ECONF16 (assignment)

# Unit 10 ECONF16 (assignment) - Name Scott Ly JHUAdvanced...

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Name: Scott Ly __________________________________________ JHU—Advanced Academic Programs Graduate Program for Applied Economics Econometrics 440.606.82 Fall 2016 HW—UNIT #10 DUE SUN November 20 by 11:59PM (EST) Please read each question carefully and answer it completely. Please copy/paste software output to the end of the assignment, in an Appendix, and use the information from your output to answer these questions. Unless you are given a different value, please use α = 0.05 in your hypothesis tests. IMPORTANT: Please note that the questions for this assignment, with the exception of #4, are taken directly from the textbook meaning you should complete ALL PARTS of the question as written in your textbook in addition to any notes I have added specific to our course [see below]. I have not “cleaned up” these data sets, although I have in some cases renamed them, which means that there are variables that you may not be using to answer these questions. #1. Chapter 10, C2 [p. 377] using the “barium data set,” [called BARIUM.RAW in the question]. Make sure you include all the necessary discussions, although your discussion may be brief. Notes for working this question: (i) please report your estimated model before you discuss the rest of the question (you do not have to formally hypothesis test to discuss the significance of the individual variables/trend); Once a time-trend variable is added the regression model takes the following form: ^ log ( chnimp )=− 2.37 + .012 t .686 lchempi + .466 lgas + .078 lrtwex + .090 befile 6 + .097 affile 6 .352 afd The only statistically significant independent variable is the time-trend variable. All other variables are very insignificant at interesting levels of significance. (ii) please conduct a formal “four step hypothesis” for this F-test. You can run this F-test in STATA and do not have to do it “by hand;” F-test Step #1 Ho : β lchempi = β lgas = β lrtwex = β befile 6 = β affile 6 = β afdec 6 = 0 Ha : At least one≠ 0 Step #2 1

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This hypothesis test is based on the F- distribution with 6, 123 degrees of freedom. α = 0.05 Reject the Ho if the F-test statistic is > 2.17 and p-value < 0.05. EXCEL command for critical value: =F.INV.RT(0.05,6,123) Step #3 F = 0.54 p-value = 0.7767 Note: The p-value was found in STATA using the test command Step #4 Since .054 <2.17 BUT 0.7767> 0.05 We Fail to Reject Ho; meaning that all other variables are jointly insignificant and that t is the only independent variable explaining lchnimp .

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