ECON1272 Basic Econometrics Sem 2 2024Java-优快云博客

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Java Python ECON1272

Basic Econometrics

Individual Assignment

This is an individual assignment where you must work alone. You must submit an electronic copy of your assignment in Canvas in pdf, doc or docx format. Hard copies and submission via email will not be accepted. Show your calculations (if any) as well as answering the questions in clear full sentences. Log referrers to natural logarithm.

QUESTION 1)

We model the salary of the average inhabitant of Pinkland. Salaries are a function of education (expressed in years), working hours (expressed in hours), firm sales (expressed in millions of pinkies) and sector. There are 3 sectors in Pinkland, namely agriculture, industry and service.

Salaries are expressed in pinkies (currency of Pinkland). The model is estimated as follows:

Log(salary) = 1.2 + 0.166*educ + 0.76*log(hours) + 0.16*log(sales) + 0.35*service -

0.13*agriculture

N=800

R2 = 0.63

1) Interpret the coefficient on education. What type of relationship is this?

This is a log-linear relationship，where each additional year of education increases the log of salary by 0.166. 2 marks

2) Interpret the coefficient on “hours” and “sales”. What type of relationship are these? 4 marks

3) We have 3 categorical variables in the regression. Which is the base category? 1 mark

4) Interpret the coefficient on “service” and “agriculture”. 4 marks

5) Calculate the degrees of freedom for the regression and explain if standard normal critical values can be used or not. 1 marks

Don’t forget: Log referrers to natural logarithm!

Subtotal: 13 marks

QUESTION 2

Use the dataset: Energy.RData,

Use R to run a cross sectional regression on energy use per capita for the listed countries as follows:

lntpes_pc = ��_��+ ��_���� + ��_������ + ��_��_{��}+ ��_���� + ��_�� + ��_�� + ��

The variables are defined as follows: lntpes_pc = log of total primary

energy consumption per capita (ktoe)

lnypcpenn =log of GDP per capita (USD) lnypcpenn2 =

square of log of GDP per capita (USD) ln_gasprice = log

of pump price for gasoline (USD/liter) ln_annualprecip=

log of annual precipitation (mm) ffrents = Fossil Fuel

Rents (% of GDP) lnpop = log of population (in millions)

lnland = log of land area (in km2)

I_Incomegroup = refers to income groups “1” , “2” and “3”, low, mid and high income

countries.

*”Log” always refers to natural logs or “ln” here.

Log referrers to natural logarithm!

1) Present your regression results in a table below (R output): 5 marks

2) Interpret the constant and its p-value. 3 marks

3) Interpret the coefficient on gas price and its p-value. 3 marks

4) Interpret the coefficient on ln land and carry out (meaning: calculate with the official formula) a t-test to determine the significance of the coefficient. 3 marks

5) Interpret the coefficient on ff-rents and its p-value. 3 marks

6) The above model belongs to the class of nonlinear equations. Calculate the turning point of the nonlinear relationship. 3 marks

7) Is this a U-shaped or inverted U-shaped relationship? 1 mark

8) Interpret the adjusted R2 of the regression. `2 marks

9) a) Please define MLR 3 and describe if MLR 3 is likely to hold or not?

b) Please define MLR 4 and describe if MLR 4 is likely to hold or not? What other variables might be in the error term?

2 x2=4 marks

Subtotal: 27 marks

Assignment Total: 40 marks

ECON1272 Basic Econometrics Sem 2 2024Java FORMULA SHEET

Critical values for the standard normal distribution (z)

Confidence level (1-α)	Level of Significance (α)	Two–Sided Critical Value cα/2	One-Sided, Upper-Tail Critical Value cα	One-Sided, Lower-Tail Critical Value -c_α
90%	10%	1.645	1.28	-1.28
95%	5%	1.96	1.645	-1.645
99%	1%	2.58	2.33	-2.33