The following model can be used to study whether campaign expenditures affect election outcomes: vote A = Bo + Bilog(expendA) + B₂log (expendB) +33prtystrA +u where vote is the percentage of the vote received by Candidate A, expendA and expendB are campaign expenditures by Candidates A and B, and prtystrA is a mea- sure of party strength for Candidate A (the percentage of the most recent presidential vote that went to A's party). 1. What is the interpretation of B₁? 2. In terms of the parameters, state the null hypothesis that a 1% increase in A's expenditures is offset by a 1% increase in B's expenditures. 3. Estimate the given model using the data in VOTE1.dta (from Wooldridge) and report the results in usual form. Do A's expenditures affect the outcome? What about B's expenditures? Can you use these results to test the hypothesis in part 2?

The following model can be used to study whether campaign expenditures affect election outcomes: vote A = Bo + Bilog(expendA) + B₂log (expendB) +33prtystrA +u where vote is the percentage of the vote received by Candidate A, expendA and expendB are campaign expenditures by Candidates A and B, and prtystrA is a mea- sure of party strength for Candidate A (the percentage of the most recent presidential vote that went to A's party). 1. What is the interpretation of B₁? 2. In terms of the parameters, state the null hypothesis that a 1% increase in A's expenditures is offset by a 1% increase in B's expenditures. 3. Estimate the given model using the data in VOTE1.dta (from Wooldridge) and report the results in usual form. Do A's expenditures affect the outcome? What about B's expenditures? Can you use these results to test the hypothesis in part 2?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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