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Unformatted text preview: Econometrics (ECO 721) - Fall 2009 Practice First Exam - Partial Answers 1 . Consider the following baseline regression for the demand for medical care, estimated on a sample of 3000 individuals, log( medex i ) = & + & 1 age i + & 2 age 2 i + & 3 f i + & 4 f i age i + & 5 f i age 2 i + & 6 log( price i )+ & 7 log( inc i )+ u i ; where medex i is the annual expenditure on medical care by person i , age i is the person&s age in years, f i is a dummy variable for female gender (=1 if female), price i is the price of medical care and inc i is household income. a . Describe the e/ect of age on medex . Note quadratic and interaction e/ects. b. Write down the restricted regression in a form suitable for estimation, the test statistic and degrees of freedom for the hypothesis that age has no e/ect on medex . F-test with 4 restrictions. c. Write down the restricted regression in a form suitable for estimation, the test statistic and degrees of freedom for the hypothesis that the e/ect of age on...
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- Spring '09