3.An economics department at a large state university keeps track of its majors' startingsalaries. Does taking econometrics affect starting salary? Let SALdollars, GPA = grade point average on a 4.0 scale, METRICS = 1 if studenttook econometrics, and METRICS = 0 otherwise. Using the data file metrics.dat,which contains information on 50 recent graduates, we obtain the estimatedregressionsalary in%3D%3D%3D%3DSAL = 24200 + 1643GPA + 5033METRICS R = 0.74%3D(se)(1078) (352)(456)(a) Interpret the estimated equation.(b) How would you modify the equation to see whether women had lower startingsalaries than men? (Hint: Define an indicator variable FEMALE = 1, if female:%3Dzero otherwise.)(c) How would you modify the equation to see if the value of econometrics was thesame for men and women?

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3. An economics department at a large state university keeps track of its majors' starting salaries. Does taking econometrics affect starting salary? Let SAL = salary in dollars, GPA = grade point average on a 4.0 scale, METRICS = 1 if student took econometrics, and METRICS = 0 otherwise. Using the data file metrics.dat. which contains information on 50 recent graduates, we obtain the estimated regression %3D %3D %3D %3D SAL = 24200 + 1643GPA + 5033METRICS R =0.74 (se) (1078) (352) (456) (a) Interpret the estimated equation. (b) How would you modify the equation to see whether women had lower starting salaries than men? (Hint: Define an indicator variable FEMALE 1, if female: zero otherwise.) (c) How would you modify the equation to see if the value of econometrics was the same for men and women?

3. An economics department at a large state university keeps track of its majors' starting salaries. Does taking econometrics affect starting salary? Let SAL = salary in dollars, GPA = grade point average on a 4.0 scale, METRICS = 1 if student took econometrics, and METRICS = 0 otherwise. Using the data file metrics.dat. which contains information on 50 recent graduates, we obtain the estimated regression %3D %3D %3D %3D SAL = 24200 + 1643GPA + 5033METRICS R =0.74 (se) (1078) (352) (456) (a) Interpret the estimated equation. (b) How would you modify the equation to see whether women had lower starting salaries than men? (Hint: Define an indicator variable FEMALE 1, if female: zero otherwise.) (c) How would you modify the equation to see if the value of econometrics was the same for men and women?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Imagine you are an economist working for the Government of Econville. You are tasked with developing a model to predict the GDP of the country based on various factors such as interest rates, inflation, unemployment rate, and population growth. You collect quarterly data for the past 20 years and start building your model. After running your initial regression, you notice some peculiar patterns in the residuals: (1) residuals do not have identical variances across different levels of the independent variables; (2) two or more independent variables in a regression model are highly correlated with each other; (3) the correlation of a variable with its own past values. You suspect that your model might be suffering from 3 potential issues in the regression analysis that can affect reliability and validity. what are the implications of Heteroscedasticity if this potential issue in your model?
Explain carefully why running the regression above might suffer from endogeneity concerns: are their any unobservable variables that might confound the results? Should we be worried about reverse causality? What empirical methods could we use to address these concerns?
q9-
Imagine you are an economist working for the Government of Econville. You are tasked with developing a model to predict the GDP of the country based on various factors such as interest rates, inflation, unemployment rate, and population growth. You collect quarterly data for the past 20 years and start building your model. After running your initial regression, you notice some peculiar patterns in the residuals: (1) residuals do not have identical variances across different levels of the independent variables; (2) two or more independent variables in a regression model are highly correlated with each other; (3) the correlation of a variable with its own past values. You suspect that your model might be suffering from 3 potential issues in the regression analysis that can affect reliability and validity. List 2 factors in your model that might be causing the Heteroscedasticity and give a reason
Imagine you are an economist working for the Government of Econville. You are tasked with developing a model to predict the GDP of the country based on various factors such as interest rates, inflation, unemployment rate, and population growth. You collect quarterly data for the past 20 years and start building your model. After running your initial regression, you notice some peculiar patterns in the residuals: (1) residuals do not have identical variances across different levels of the independent variables; (2) two or more independent variables in a regression model are highly correlated with each other; (3) the correlation of a variable with its own past values. You suspect that your model might be suffering from 3 potential issues in the regression analysis that can affect reliability and validity. Based on Addressing Heteroscedasticity list one test you would employ to test this potential issue?
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Please answer all three sub-sections of this question
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number 1 please
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