Homework2 - Mehmet Soytas Wednesday, May 21, 2009 Applied...

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Mehmet Soytas Applied Econometrics I, Summer, 2009 Wednesday, May 21, 2009 (due: Wednesday, May 27, 2009) Homework Assignment 2 1. Show that the OLS formula for the coe¢ cient 1 in the multiple regression model Y i = & 0 + 1 X 1 i + 1 X 2 i + u i reduces to the OLS formula of 1 in the one regressor case if the correlation between X 1 i and X 2 i is zero. 2. For this question, use the California Testscore Data Set and your regression package (STATA). a. First perform a multiple regression of testscores on a constant, the student-teacher ratio, and the percent of English learners. Record the coe¢ cients. Next, do the following three step procedure instead: b. First, regress the testscore on a constant and the percent of English learners. Calculate the residuals and store them under the name resYX2. c. Second, regress the student-teacher ratio on a constant and the percent of English learners. Calculate the residuals from this regression and store these under the name resX1X2. d. Finally regress resYX2 on resX1X2. Explain intuitively why the simple regression coe¢ cient in the last regression is identical to the regression coe¢ cient on the student-teacher ratio in the multiple
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This note was uploaded on 07/02/2009 for the course ECON 1150 taught by Professor Staff during the Summer '08 term at Pittsburgh.

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Homework2 - Mehmet Soytas Wednesday, May 21, 2009 Applied...

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