3. Consider the following estimated regression equation, estimated using a sample of firms, where RDis total firm spending on research and development in USD ($), Revenue is total firm revenuein USD ($), and W ages is the firms’ total spending on wages in USD ($) (standard errors inparentheses):RDd = 1000(600)+ 0.5(0.1)Revenue + 1.5(0.5)W ages,(a) Interpret the coefficients on each of the explanatory variables. (b) Which of the three coefficients are statistically significant at the 5% level of significance? Howdo you know? A researcher runs a two-sided statistical test of the null hypothesis that both the coefficients onthe explanatory variables above are jointly equal to 0.25 (mathematically, that β1 = β2 = 0.25),and reports a p-value of 0.045.(c) What does this p-value mean for the outcome of the test? (d) What would an appropriate two-sided alternative hypothesis look like?
3. Consider the following estimated regression equation, estimated using a sample of firms, where RD
is total firm spending on research and development in USD ($), Revenue is total firm revenue
in USD ($), and W ages is the firms’ total spending on wages in USD ($) (standard errors in
parentheses):
RDd = 1000
(600)
+ 0.5
(0.1)
Revenue + 1.5
(0.5)
W ages,
(a) Interpret the coefficients on each of the explanatory variables.
(b) Which of the three coefficients are statistically significant at the 5% level of significance? How
do you know?
A researcher runs a two-sided statistical test of the null hypothesis that both the coefficients on
the explanatory variables above are jointly equal to 0.25 (mathematically, that β1 = β2 = 0.25),
and reports a p-value of 0.045.
(c) What does this p-value mean for the outcome of the test?
(d) What would an appropriate two-sided alternative hypothesis look like?
Step by step
Solved in 2 steps
