hw3 - PS 233 Intermediate Statistical Analysis Homework 3...

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1 PS 233 – Intermediate Statistical Analysis Homework 3: Omitted Variable Bias Research Note (Due 3/8/2002) Economic Growth in the Tropics A recent paper has claimed that “tropical countries have shown a consistent pattern of stagnant economic growth in the last 25 years. In the period from 1965 to 1990, the average annual growth of GDP per capita for countries in the tropics was a paltry 1.13%, whereas countries outside that region grew on about 2.56% annually. This difference is not due to a statistical random error: a comparison of means test yields a t-statistic equal to 3.9310 (p-value 0.0002). This finding is corroborated by more systematic evidence obtained using multivariate linear regression. As Table 1 shows, even after controlling for economic and social variables, tropical countries grew about 1.1% percentage points per year slower than countries outside the tropics. This finding indicates that geographic factors matter in determining countries’ propensity to grow.” How would you respond to this claim? Prepare a report that challenges this finding. Discuss how your methodology is superior to those employed in the paper; Prepare tables and graphs as you see fit;
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