Table 2: OLS regression coefficients of household share of expenditure spenton mealie meal and meatMealie mealMeatIn ()In(n)-0.650.59-0.01-0.00Ratio of males:0-2 years-1.410.673-4 years-1.660.555-14 years-3.780.0315-54 years-3.580.6855+ years-4.180.21Ratio of females:0-2 years-2.14-0.383-4 years-0.88-0.225-14 years-1.610.0115-54 years2.340.992.1 Considering the tables above, what evidence is there that Engel's Law holds for this coun-try?2.2 In table 2, discuss the meaning of the coefficients on the variables capturing the ratio offemales and males for various age categories.2.3 Interpret the coefficients of per capita household expenditure in table 2. Based on this, ismealie meal a necessity or luxury good? And meat? Why?2.4 What information could one obtain from the sign of the coefficient of household size intable 2? 2. Consider the following two tables with output derived from data of a single country.Table 1 sets out expenditure shares for households at various points on the income distri-bution.1Table 1: Expenditure shares for householdsExpenditure shares (percentage) at:Expenditure category median of incomebottom 10% oftop 10% ofdistributionincomeincomedistributiondistributionFood46.350.218.3Rent19.125.827.7Transport5.85.59.8Household Items1.90.110.4Healthcare1.10.513.6Education12.02.415Personal items5.35.12.3Energy3.12.30.8Clothing2.21.21.9Miscellaneous3.22.64.2Total100100100Table 2 sets out the regression output from an OLS regression estimating the share ofhousehold budget devoted to mealie meal and meat using the Working-Leser Engel curvespecification:K-1wi = ai + Biln (2) + niln(n)+Yik-n+ T;Z + uik=1where w; is the share of total household expenditure on food item i (mealie meal ormeat) measured as a proportion between 0 and 1, y is total household expenditure, n ishousehold size, n; e {1,..., K} is the number of people in age-sex category j, z is a vectorof other household characteristics, and u is an error term. Assume that all coefficients arestatistically significant.

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2.1 Considering the tables above, what evidence is there that Engel's Law holds for this coun- try? 2.2 In table 2, discuss the meaning of the coefficients on the variables capturing the ratio of females and males for various age categories. 2.3 Interpret the coefficients of per capita household expenditure in table 2. Based on this, is mealie meal a necessity or luxury good? And meat? Why?

2.1 Considering the tables above, what evidence is there that Engel's Law holds for this coun- try? 2.2 In table 2, discuss the meaning of the coefficients on the variables capturing the ratio of females and males for various age categories. 2.3 Interpret the coefficients of per capita household expenditure in table 2. Based on this, is mealie meal a necessity or luxury good? And meat? Why?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Production And Growth

Section: Chapter Questions

Problem 5CQQ

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