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Unformatted text preview: Econ 326 Solution to Midterm 1. (a) A= 1; B= =1.65334; C
Model SS =
D=21
1
1=19;
1.6534= 3.83; E= =0.20; F=Model SS+ Residual SS=5.48; G=21
1=20; H= =0.274; I = 0.26; J=
= 0.45; K= (
0.6114
0.0952)/2=
0.3533; L= =0.1233; M= =
2.8653; N=2*0.005=0.01; %according to the table, t(19,0.995)=2.861; (b) The coefficiency corresponds to the elasticity which has an interpretation of: a one percentage increase in alcohol consumption will result in K percentage change in heart disease death; (c) One sided Test Reject : β≥0, iff T<
t(19,0.95); Since
2.865<
1.729, we reject the Null; (d) No, there is no causal interpretation to the effect of alcohol, in contrast, the model might subject to some endogeneity problem resulted from ommited variables bias. 2. β%= = So E[β"ІX] = = +β; β% is unbiased iff +β + ; ...
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This note was uploaded on 03/24/2012 for the course ECON 326 taught by Professor Whisler during the Spring '10 term at The University of British Columbia.
 Spring '10
 whisler

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