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

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

View Full Document Right Arrow Icon
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
Image of page 1

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

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    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.

    Student Picture

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

  • Left Quote Icon

    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.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    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.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern