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ARE106SU09HW5-1

# ARE106SU09HW5-1 - University of California Davis Managerial...

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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/DATA4-3) 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 right-hand side determinant, you are to conduct a t-test 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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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 non-white 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/DATA7-2) 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 2i

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