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Unformatted text preview: ECON 4261: Introduction to Econometrics Fall 2009 Problem Set 4 Due: Dec 14, 2009 Exercise 1 Data on a three variable regression Y i = 1 + 2 X 2 i + 3 X 3 i + u i yield the following results: X X = 33 40 20 20 60 X Y = 132 24 92 X ( Y- Y ) 2 = 150 (i) What is the sample size? (ii) Estimate the regression. (iii) Estimate the standard error of 2 and test the hypothesis that 2 is zero. (iv) Test the same hypothesis by running the restricted regression and exam- ining the difference in the residual sum of squares. Exercise 2 Suppose you estimated the following regression: Y = 10 + 2 X + 3 D where Y is earnings, X is education in years and D is the dummy variable which is zero for females and one for males. (i) If we were rerun the regression with the dummy variable redefined as one for females and two for males, what results would we get?...
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- Fall '08