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University of California, Davis
Managerial Economic(ARE) 106, Summer 2009
Instructor: John H. Constantine
Problem Set #5: Due THURSDAY, September 3, 2009
Problem 1
:
You are to run SHAZAM for this problem.
Assume
α
= 0.05
.
Annual data on new housing units and their determinants
housing
= total new housing units started, in thousands
pop
= U.S. population in millions
gnp
= gross national product in constant 1982 dollars in billions
unemp
= unemployment rate in % among all workers
intrate
= new home mortgage yields, FHLBB, in %
sample 1 23
read(are106/DATA43) year housing pop gnp unemp intrate
ols housing pop gnp unemp intrate
stop
(a)
What is the PRF implied by the SHAZAM command file give above?
(b)
What signs do you expect on each coefficient, a priori.
Briefly explain why this is so.
(c)
For each righthand side determinant, you are to conduct a ttest on whether each determinant
contributes to new housing starts.
Provide a brief interpretation of each determinant’s effect on
housing starts.
(e)
Test the overall significance of the model.
State H
0
, the estimated F and the critical F, and make
your conclusion.
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View Full Document Problem 2
:
You are to run SHAZAM for this problem.
Assume
α
= 0.05
.
Data on salaries and employment characteristics of 49 employees in a
certain company.
WAGE = Wage rate per month (Range 981  3833)
EDUC = Years of education beyond 8th grade when hired (Range 1  11)
EXPER = Number of years at the company (Range 1  23)
AGE = Age of employee (25  64)
GENDER = 1 for male and 0 for female
RACE = 1 For white, 0 for nonwhite
CLERICAL = 1 for clerical workers, 0 for others
MAINT = 1 for workers in maintenance and 0 for others
CRAFTS =1 if employee was in crafts, 0 otherwise
Control group is professionals.
sample 1 49
read(are106/DATA72) WAGE EDUC EXPER AGE GENDER RACE CLERICAL MAINT CRAFTS
GENR LNWAGE = LOG(WAGE)
OLS LNWAGE EDUC EXPER AGE / LOGLIN
stop
(a)
What is the equation being estimated?
(b)
What is the economic interpretation of
β
2
,
β
3
, and
β
4
?
(c)
Use your SHAZAM results to determine the overall validity of the model you have estimated.
State the hypothesis test and the relevant test statistics.
(d)
Do education, experience, and age have an impact on wage growth?
If so, provide numeric
values here.
Note:
You must state the relevant hypothesis tests to answer this question.
Problem 3
:
See computer printout on the next page to answer parts of this question.
You wish to estimate the demand for beer, and hypothesize that you can model the demand for beer with
the following equation:
Y
i
=
β
1
X
2i
β
2
X
3i
β
3
X
4i
β
4
X
5i
β
5
e
ui
,
where the variables are defined as follows:
Y
i
= quantity demanded for beer, measured in liters (e.g., quarts)
X
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This note was uploaded on 11/19/2009 for the course ARE ARE106 taught by Professor Constantine during the Spring '09 term at UC Davis.
 Spring '09
 CONSTANTINE

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