Problem Set 5
Due: Tuesday, April 22, at the start of class. No late problem sets will be accepted.
1. This question is about credit markets in developing countries. Assume that there are
2 types of potential borrowers: high-risk and low-risk. Hi
Problem Set 1 - Solutions
(a) The t-statistic for 0 is 0.723/0.211 = 3.43, which is greater than 2. This means
that 0 is statistically signicant. The t-statistic for 1 is 0.231/0.112=2.06. 1
is statistically signicant.
(b) The predicted probab
Final Practice Questions
1. This question is about credit markets. Entrepreneurs can either invest in a project
which costs F or can work for a wage w. If the project is a success, the entrepreneur
gets output X; if its a failure, she gets nothin
Midterm Practice Questions - Solutions
1. Answers to these questions are discussed in the lecture notes
(a) The regression is just
school completioni = 0 + 1 CCTi + i
0 is the completion rate in control schools (0.50). 0 + 1 is the completion
Problem Set 1
Due: Tuesday, February 3, at the start of class. No late problem sets will be accepted.
1. Lets say that we are interested in estimating the eect of having an insecticide-treated
bednet on the probability of getting malaria. We have
MIDTERM EXAM - Solutions
April 1, 2014
Professor Anthony Keats
(a) Baird et al. test the eects of Conditional Cash Transfers (CCT) and Unconditional Cash Transfers (UCT) on school attendance. The CCT was conditional on
school enrollment, while
Final Practice Questions - Solutions
(a) Expected utility when putting in high eort is pX E F . When putting in low
eort its, qX F . The nal alternative is that the farmer could work for a wage.
So the 2 conditions are
pX E F qX F
(p q)X E
Problem Set 2 - Solutions
(a) 1 = mean for control group = 65, 1 = dierence between those that got textbooks and control = 75 65 = 10. This is likely biased upwards since the
schools that were closed on the day the researcher came were likely
Problem Set 3
Due: Tuesday, February 18, at the start of class. No late problem sets will be accepted.
1. In sub-Saharan Africa, many families cannot aord to send their kids to high school
because the cost of doing so is very high. You are intere
Problem Set 4
Due: Tuesday, April 1, at the start of class. No late problem sets will be accepted.
1. Consider a village of a large number of identical farmers. All farmers work their own
land. They can choose how much eort to apply to their land
Problem Set 5 - Solutions
(a) The bank lends out L and gets L(1 + r) back, so its (undiscounted) prots are
(b) From the low-risk types, the bank would make Li with probability pl and would
lose L with probability 1 pl , so expected prots a
Problem Set 3 - Solutions
(a) The probability that a kid that didnt get a scholarship is in school is 0 = 0.23.
The probability that a kid that did get a scholarship is in school is 0 + 1 = 0.81.
(b) The dierence in the probability of enrollme
Problem Set 4 - Solutions
(a) Expected utility from working hard is PW (u(H) Q) + (1 PW )(u(L) Q) =
PW u(H) + (1 PW ) u(L) Q. Expected utility from not working hard is
PDW u(H) + (1 PDW ) u(L), so the farmer works hard if expected utility
Problem Set 2
Due: Tuesday, February 11, at the start of class. No late problem sets will be accepted.
1. A researcher is conducting a randomized evaluation of a textbook program in 100
schools. The researcher randomly selects 50 of the schools t
March 6, 2014
Professor Anthony Keats
This exam is scheduled to last 1 hour and 20 minutes. There are 70 points on the exam. The
points correspond to the number of minutes that each question is designed to take (including