# 2008 - THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF...

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THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ECONOMICS ECON 2206 INTRODUCTORY ECONOMETRICS FINAL EXAMINATION SESSION 1, 2008 1. TIME ALLOWED - 2 Hours. 2. READING TIME = 10 Minutes 3. THIS EXAMATION PAPER HAS 9 PAGES 4. TOTAL NUMBER OF QUESTIONS - 6. 5. ANSWER ALL QUESTIONS. 6. ALL QUESTIONS ARE OF EQUAL VALUE 7. TOTAL MARKS AVAILABLE FOR THIS EXAMATION - 60. 8. THE MARKS AWARDED TO EACH PART OF A QUESTION ARE INDICATED. 9. CANDIDATES MAY BRING THEIR OWN CALCULATORS TO THE EXAM 10. STATISTICAL TABLES ARE PROVIDED AT THE END OF THE EXAM PAPER 11. ALL ANSWERS MUST BE WRITTEN IN PEN. PENCILS MAY BE USED ONLY FOR DRAWING, SKETCHING OR GRAPHICAL WORK. 12. THIS PAPER MAY BE RETAINED BY THE CANDIDATE Please see over pfJ

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ANSWER ALL SIX QUESTIONS REMINDER: When performing statistical tests, always state the null and alternative hypothe- ses, the test statistic and it's distribution under the null hypothesis, the level of significance and the conclusion of the test. Question 1. (10 Marks). (i) What are the distinctive features of 'panel data' compared to 'cross-section' data? Explain. (2 marks). (ii) In the model: price = /3 0 + /3 1 area + /32bdrms + /33 area x bdrms + u what is the partial effect of bdrms on price? (2 marks). (iii) What is the 'p-value' for a test statistic? SHAZAM reported the p-value for a test was 0.022; should I therefore reject the null hypothesis at the 1 % level of significance? (2 marks) (iv) Consider the following regression model explaining child birthweight (bwght): bwght = /3 0 + /3 1 cigs + /3 2 f amine + u where cigs=average number of cigarettes the mother smoked per day during pregnancy and faminc=family income. In the sample of data I do not have a measure of family income. One option is to find a 'proxy variable' for family income. What are the desirable properties of a proxy variable? Suggest one possible proxy for family income. (2 marks) (v) What is meant by the 'sampling distribution' of an estimator? What is known about the sampling distribution of the OLS estimator under the first 4 Gauss-Markov assumptions? (2 marks) Please see over
Question 2. (10 Marks in total) The variable smokes is a binary variable equal to one if a person smokes, and zero otherwise. The estimates for the linear probability model explaining smokes are: .smokes 0.301 - 0.093 log (pri ce) - 0.029 log( income) - 0.031 educ + 0.020 age - 0.00024 age 2 (0.132) (0.184) (0.009) (0.006) (0.006) (0.00006) [0.087J [0.187J [0.032J [0.004J [0.006] [0.00005] n = 220, R 2 = 0.213 where price is the price of cigarettes, income is monthly income, educ is years of education, and age is the person's age measured in years. The usual OLS standard errors are reported in parentheses (.), and the heteroskedasticity-robust standard errors are reported in brackets [.]. (i) What is the interpretation of the coefficient on

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## This note was uploaded on 06/11/2011 for the course ECON 2206 taught by Professor Yang during the Three '11 term at University of New South Wales.

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2008 - THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF...

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