chap05 - CHAPTER 5 Exercise Answers EXERCISE 5.1 (a) y 1,...

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22 CHAPTER 5 Exercise Answers EXERCISE 5.1 (a) 23 1, 0, 0 yx x  * 2 i x * 3 i x * i y 0 1 0 1 2 1 2 1 2 2 0 2 1 1 1 2 1 2 0 1 1 1 1 0 1 0 1 (b) 22 ** 3 3 13, 16, 4, 10 ii i i x x   (c) 2 0.8125 b 3 0.4 b 1 1 b (d)   ˆ 0.4, 0.9875, 0.025, 0.375, 1.4125, 0.025, 0.6, 0.4125, 0.1875 e  (e) 2 ˆ 0.6396  (f) 23 0 r (g) 2 se( ) 0.1999 b (h) 3.8375 16 SSE SST 2 12.1625 0.7602 SSR R
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Chapter 5, Exercise Answers, Principles of Econometrics, 4e 23 EXERCISE 5.2 (a) 2 (0.975,6) 2 se( ) (0.3233, 1.3017) bt b  (b) We do not reject 0 H because 0.9377 t   and 0.9377 2.447  = (0.975, 6) t . EXERCISE 5.4 (a) The regression results are:    2 0.0315 0.0414ln 0.0001 0.0130 0.0247 se (0.0322) (0.0071) (0.0004) (0.0055) WTRANS TOTEXP AGE NK R  (b) The value 2 0.0414 b suggests that as   ln TOTEXP increases by 1 unit the budget proportion for transport increases by 0.0414. Alternatively, one can say that a 10% increase in total expenditure will increase the budget proportion for transportation by 0.004. (See Chapter 4.3.3.) The positive sign of 2 b is according to our expectation because as households become richer they tend to use more luxurious forms of transport and the proportion of the budget for transport increases. The value 3 0.0001 b implies that as the age of the head of the household increases by 1 year the budget share for transport decreases by 0.0001. The expected sign for 3 b is not clear. For a given level of total expenditure and a given number of children, it is difficult to predict the effect of age on transport share. The value 4 0.0130 b implies that an additional child decreases the budget share for transport by 0.013. The negative sign means that adding children to a household increases expenditure on other items (such as food and clothing) more than it does on transportation. Alternatively, having more children may lead a household to turn to cheaper forms of transport. (c) The p -value for testing 03 :0 H   against the alternative 13 H   where 3 is the coefficient of AGE is 0.869, suggesting that AGE could be excluded from the equation. Similar tests for the coefficients of the other two variables yield p -values less than 0.05. (d) 2 0.0247 R (e) For a one-child household: 0 0.1420 WTRANS For a two-child household: 0 0.1290 WTRANS
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Chapter 5, Exercise Answers, Principles of Econometrics, 4e 24 EXERCISE 5.8 (a) Equations describing the marginal effects of nitrogen and phosphorus on yield are    8.011 3.888 0.567 EY IELD NITRO PHOS NITRO
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chap05 - CHAPTER 5 Exercise Answers EXERCISE 5.1 (a) y 1,...

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