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Homework 3
Total marks: 10
Qs 3) Use the data in
MEAP93.dta
to answer the following:
i.
Estimate a multiple model regressing
math10
on
log(expend)
and
lnchprg.
Are the slope
coefficients what you expected?
(1)
ii.
What do you make of the intercept you have estimated? Does it make sense to set the two
explanatory variables to zero? [Hint: recall that log(1) = 0] (1.5)
iii.
Now run the simple regression of
math10
on
log(expend)
and compare the slope
coefficient with the estimate obtained in part (i). Is the estimated spending effect larger or
smaller than in part (i)? (1)
Solution:
i) Command: reg
math10 lexpend lnchprg
math10 
Coef.
Std. Err.
t
P>t
[95% Conf. Interval]
+
lexpend 
6.229683
2.972634
2.10
0.037
.3859641
12.0734
lnchprg 
.3045853
.0353574
8.61
0.000
.3740923
.2350784
_cons 
20.36069
25.07287
0.81
0.417
69.64992
28.92853
The signs of the estimated slopes imply that more spending increases the pass rate (holding
lnchprg fixed) and a higher poverty rate (proxied well by lnchprg) decreases the pass rate
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This note was uploaded on 03/23/2012 for the course ECON 201 taught by Professor Cowell during the Spring '10 term at LSE.
 Spring '10
 Cowell

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