hw2 - Get the OLS estimates of the intercept and slope...

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1 PADP 8130 Spring 2012 Fertig UGA Homework 2 Due January 30, 2012 1. Go to UCLA Stata Starter Kit webpage: http://www.ats.ucla.edu/stat/stata/sk/modules_sk.htm Read through the following modules: Overview of Stata syntax Working across variables using foreach All of the modules under “Graphics” 2. The following table gives data on quit rates per 100 employees and unemployment rates in 13 large states. State Quit rate Unemployment Rate 1 1.3 6.2 2 1.2 7.8 3 1.4 5.8 4 1.4 5.7 5 1.5 5.0 6 1.9 4.0 7 2.6 3.2 8 2.3 3.6 9 2.5 3.3 10 2.7 3.3 11 2.1 5.6 12 1.8 6.8 13 2.2 5.6 a. Plot the data in a scatter diagram with a fitted line. You can input data into Stata by using the “input” command. Use help to read up on it. b. Assume that the quit rate (Y) is linearly related to the unemployment rate (X) as Y=a+bX+e. Calculate a and b by hand or using excel (showing your work).
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Unformatted text preview: Get the OLS estimates of the intercept and slope coefficients using Stata as well. 3. Suppose the classic linear regression model applies to y=bx+e. a. What is the OLS estimator for the slope coefficient when there is no constant term? Show your work. b. The slope coefficient in the regression of x on y is just the inverse of the slope from the regression of y on x (no constant term in both cases). Is this statement true, false, or uncertain? Explain your answer. c. Run a regression of the above form in Stata using PSID data. Note that to run a regression without a constant term in Stata, you need to use the option “noconstant”. When you switch x and y in the regression, is the slope coefficient the inverse of the original slope coefficient? Show your work....
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This note was uploaded on 03/28/2012 for the course PADP 8130 taught by Professor Fertig during the Spring '12 term at LSU.

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