2009_ECON0701_Tutorial_4_Ques1-3

# 2009_ECON0701_Tutorial_4_Ques1-3 - ECON0701 Econometrics...

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ECON0701 Econometrics Tutorial 4 2009 Sem 1 Angela Mak Question 1 a) Holding other factors constant, if increasing the number of bedrooms by 1, on average the housing price will change by 100 % 2 . b) No omitted variable bias, so that the zero conditional mean assumption will not be violated, and the OLS estimators are not biased. Homoskedasticity, so that we can apply the simplified formulae for estimation of variances of the OLS estimators. The standard errors will then be valid.

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1 2 k n SSR 1 2 88 197 . 0 SSR SSR=16.745 TSS SSR R 1 2 6432 . 40 588 . 0 1 745 . 16 1 2 R SSR TSS d) We use 2 1 100 to estimate for 2 1 2 1 2 1 100 ) ( ) ( 100 ) 100 ( ) ( E E E E , so the estimator is unbiased. % 7 . 6 067 . 0 029 . 0 ) 00038 . 0 ( 100 100 2 1 which means that having an additional 100-square-feet bedroom, house price is expected to increase by 6.7%.
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2009_ECON0701_Tutorial_4_Ques1-3 - ECON0701 Econometrics...

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