ps7-1 - k is the number of explanatory variables in the...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Problem set 7 Due on November 11 in class. Problem 1. Using the data on 104 apartments, you run 2 di f erent re- gressions: a regression of rent on living space and # of bedrooms, and a regression of rent on living space, # of bedrooms, and a dummy for studios interacted with Living Space. The results of the regressions are given below: d Rent =800+3 ( Living Space )+100 ( #o fbedrooms ) , and d Rent =6 0 0+ 3 ( Living Space )+80 ( #o fbedrooms ) +4 ( Living Space ) ( Dummy for studios ) Thesumo fthesqua redre s idua l sinthe f rst regression is 105 and in the second regression is 100. a) Interpret the coe cient on # of bedrooms in the f rst regression (that is, describe its economic meaning) b) Interpret coe cient on ( Living Space ) ( Dummy for studios ) in the second regression c) Using the rule of thumb F-test (F-statistic is equal to ( SSR restricted SSR unrestricted ) /q SSR unrestricted /
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: k is the number of explanatory variables in the unrestricted regression), test a hypothesis that there is no systematic di f er-ence in the marginal e f ect of the Living Space on the Rent between studios and other apartments. Problem 2. You are given the following regression data d Expenditure = 300 (100) + 0 . 5 (0 . 4) Income 100 (50) D + 0 . 3 (0 . 3) Income D where the standard errors of the OLS estimators are given in the parentheses 1 and D is a dummy variable equal to 1 if individual is African American and 0 otherwise. a) What is the economic interpretation of all the coe cients in the above regression? b) Assuming that the OLS estimators of the coe cients on Income and on Income D are independent, provide a 95% con f dence interval for a forecast of the increase in the expenditure of an African American, whose income has just increased by 100. 2...
View Full Document

This note was uploaded on 12/20/2009 for the course ECON 1300 taught by Professor Natski during the Fall '09 term at Columbia.

Page1 / 2

ps7-1 - k is the number of explanatory variables in the...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online