Midterm10

# Midterm10 - Department of Economics ECONOMETRICS I Fall...

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2 . The regression results below are based on a sample of 2,500 observations on 500 American banks observed from 1996-2000. The dependent variable is C, the log of costs. The independent variables are a constant, W1,W2,W3,W4 = logs of prices of 4 inputs (C and W1-W4 are all divided by the price of a 5 th input, W5, before taking logs, so that the cost function is homogeneous of degree one in prices.) Q1, Q2, Q3,Q4, Q5 are the logs of 5 outputs. T is a time trend that takes the values 1,2,3,4,5, since there are 5 years of data. In the third regression result, T2 is T 2 /2 = 1/2 times the square of T. First Regression, Unrestricted +----------------------------------------------------+ | Ordinary least squares regression | | LHS=C Mean = 11.46039 | | Standard deviation = 1.174110 | | WTS=none Number of observs. = 2500 | | Model size Parameters = 11 | | Degrees of freedom = 2489 | | Residuals Sum of squares = 152.5817 | | Standard error of e = .2475933 | | Fit R-squared = .9557087 | | Adjusted R-squared = .9555307 | | Model test F[ 10, 2489] (prob) =5370.71 (.0000) | +----------------------------------------------------+ +---------+--------------+----------------+--------+---------+----------+ |Variable | Coefficient | Standard Error |b/St.Er.|P[|Z|>z] | Mean of X| +---------+--------------+----------------+--------+---------+----------+ Constant .60183154
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Midterm10 - Department of Economics ECONOMETRICS I Fall...

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