pset3 - Qualitatively, the line appears to be flatter...

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Anoushka Vaswani Problem Set 3 1. a. The regression error appears to be heteroskedastic. The variance of u given X seems to depend on X. b. The standard errors have changed. In addition, the p-values, t-statistics and confidence intervals have also changed. c. It does make a qualitative difference in my results (see graph).
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Unformatted text preview: Qualitatively, the line appears to be flatter (slope closer to 0). Dropping the outlier also my STATA output. I can no longer reject the null hypothesis that the coefficient of tradeshare (the slope of the line) is equal to 0 at a 5% significance level. (1.94<1.96) 2....
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