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ProblemSet1Ans

# ProblemSet1Ans - ECON 3200 Introduction to Econometrics...

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ECON 3200 Introduction to Econometrics Answers for Problem Set 1 Problem 1 (Wooldridge C1.1) (i) The average of educ is about 12.6 years. There are two people reporting zero years of education, and 19 people reporting 18 years of education. (ii) The average of wage is about \$5.90, which seems low in the year 2008. (iii) Using Table B-60 in the 2004 Economic Report of the President , the CPI was 56.9 in 1976 and 184.0 in 2003. (iv) To convert 1976 dollars into 2003 dollars, we use the ratio of the CPIs, which is 184 /56.9 3.23 . Therefore, the average hourly wage in 2003 dollars is roughly 3.23(\$5.90) \$19.06 , which is a reasonable figure. (v) The sample contains 252 women (the number of observations with female = 1) and 274 men. Problem 2 (Wooldridge 2.3) (i) Let y i = GPA i , x i = ACT i , and n = 8. Then x = 25.875, y = 3.2125, 1 n i = ( x i x )( y i y ) = 5.8125, and 1 n i = ( x i x ) 2 = 56.875. From equation (2.9), we obtain the slope as 1 ˆ β = 5.8125/56.875 .1022, rounded to four places after the decimal. From (2.17), 0 ˆ β = y 1 ˆ β x 3.2125 – (.1022)25.875 .5681. So we can write ° GPA = .5681 + .1022 ACT n = 8.

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ProblemSet1Ans - ECON 3200 Introduction to Econometrics...

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