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# hw3 - Professor Tanya Molodtsova Office Rich 319 E-mail...

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Professor Tanya Molodtsova ECON 422 Office: Rich 319 Econometrics E-mail: [email protected] Fall 2011 SOLUTION - Problem Set 3 Q1. (5 points) Download the Stata file gpa.dta you have used in Problem Set 2. Open the data in Stata following the steps we learned in class. - Start Stata - Save Excel file as a .csv file in your working folder, (make sure that your .csv file contains only one worksheet) - Specify your working folder in Stata by using the “cd” command - Open the saved .csv file in Sta ta, by typing “insheet using gpa .csv” a. Regress GPA on HSGPA, SEX, and RACE. Show your Stata output for this regression. Carefully interpret the coefficient on HSGPA. Is it different from the coefficient on HSGPA in the simple regression model you have estimated in Problem Set 2? b. Carry out a t-test for the hypothesis the coefficient on HSGPA is statistically significant at the 5% level. c. Generate a series of residuals from this regression by typing after running the regression: predict uhat, resid. Draw a histogram for the residuals. Do they look normally distributed? To draw the histogram, use: histogram uhat, normal d. You want to study the variance of your residuals to see if heteroskedasticity is present in the data. Generate a series of squared residuals: gen uhatsq=uhat*uhat Examine the scatter plots of uhatsq against your dependent variables: scatter uhatsq hsgpa

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