ECON_6218_Problem_Set_#1_Spring_2010

# ECON_6218_Problem_Set_#1_Spring_2010 - ECON 6218 ADVANCED...

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ECON 6218: ADVANCED BUSINESS AND ECONOMIC FORECASTING McGregor Spring 2010 Problem Set #1 [1] A researcher has estimated the effects of gender on wages for a sample of 468 individuals. The results of one of the researcher’s regressions are shown below (with standard errors shown in parentheses): WAGES = 5.72 + 1.26 JobExperience – 0.92 FEMALE + 0.35 (JobExperience*FEMALE) (1.22) (0.31) (0.55) (0.20) WAGES are measured in dollars per hour; JobExperience is measured in years; and FEMALE is a dummy variable equal to one for females and zero for males. (a) Compute point estimates of the average “starting wages” for males and females. (b) Compute a 95% confidence interval for estimated starting wages for males. (c) Test the null hypothesis that starting wages are unrelated to gender. (d) Test the null hypothesis that the effect of experience on wages is unrelated to gender. (e) Sketch the relationships between wages and experience for males and females on the same graph. Briefly describe your findings. [2] A researcher is studying the rationality of housing assessments. Data on assessments A and subsequent transactions price P were gathered on 88 houses and the following regression equation was estimated (with standard errors shown in parentheses): ln(P) = -14.47 + 0.976 ln(A) (16.27) (0.049) R 2 = 0.820 Residual Sum of Squares = 165,644.41 The researcher also calculated . Test the joint hypothesis that the assessments in the sample were rational (which requires that the intercept equal zero and the slope coefficient equal one).

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