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Unformatted text preview: d individual’s income (Inc), in dollars, for the United States for the period 1979‐1985. In 1982 the United States suffered a very bad recession, an event that might disturb the relationship between Don and Inc. To see if this happened, you estimate a simple savings function that relates Don to Inc. 2 log( Don) = α + β1 log( Inc) + β 2 D + β3 log( Inc) * D + u, where D=1 for 1979‐1981, and 0 for 1982‐1985. (1) What is the impact of the recession (D) on donations? Write down the expression for it. (2)How would you test the null hypothesis that the donation‐income relationship did not change before and after the 1982 recession? Write down the null hypothesis and determine if you need to perform a t test or an F test. 5. You are curious about how many words individuals speak per day, so you estimate the following model, words = α + β1 female − β 2 married − β3 female * married + u, Below is what you get, words = 1,000 + 1,000 female − 500married + 1,000 female * married , (300) (350) (200) (400) n=526, R 2 = .308 where words is the number of words one speaks per day; female is a dummy equal to 1 if female and 0 otherwise; and married is a dummy indicating one is married or not, and married is 1 if married and 0 otherwise. (1) How would you interpret the coefficient of female? (2) How would you interpret the coefficient of married? (3) How would you test the hypothesis that marital status does not have ANY significant impact on words spoke per day? That is, for both males and females, being married does not have significant impacts on words spoke per day. Write down the null hypothesis, determine if you need a t or an F test. 3 (4) How would you determine whether the gender difference in talkativeness depends significantly on marital status. Write down the null hypothesis, determine if you need a t or an F test, and what is your conclusion? 4...
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