ECO
ecm2ie-sol3r_2016.rtf

# ecm2ie-sol3r_2016.rtf - Introductory Econometrics Brief...

• 3

This preview shows pages 1–2. Sign up to view the full content.

Introductory Econometrics Brief Solutions to Problem Set No. 3 Problem One (to be done before the lab session) Do Problem 5.9 on page 203 of the textbook “Principles of Econometrics”. You can exclude (d). Solutions The marginal effect is β 3 +2 β 4 EXPER β 2 , β 3 >0 (wages should increase with education and experience) and β 4 < 0 (diminishing and ultimately negative returns to experience (over the hill?)) Returns will start to decline at the experience is − β 3 /(2β 4 ) (where the marginal effect is zero). (i) 2.2774 (ii) (iii) (iv) W ages will decline after approximately 34 years of experience. Problem Two (to be done during the lab session) Review sections 5.1 to 5.3 and 5.5 of Chapter 5 of “Using Eviews for Principles of Econometrics, Fourth Edition”. It would be a good idea to work through this at home. Download the files cocaine.wf1 and cocaine.def and complete exercise 5.12 on pages 204 and 205 of the textbook. Solutions If dealers offer quantity discounts we expect the coefficient on quantity to be negative. The coefficient on quality should be positive. We have no specific

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.
• One '14

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern