5. Suppose that you get the following regression result from a sample of 277 observations: =...

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5. Suppose that you get the following regression result from a sample of 277 observations: = 4.57 +0.188x1 - 0.22x2 + 0.171x3 0.92x4 (0.25) (0.040) (0.21) (0.055) (0.33) R = 0.353 The numbers in the parentheses are the heteroskedasticity robust standard errors for the OLS estimates. 2 (a) Compute t statistics for the coefficients on x2 and x4 (The null hypothesis is that the coefficient is 0) (b) (1.96) = 0.975, where (.) is the CDF of a standard normal distribution. Given this information, explain whether x2 has a significant effect on y or not. How about x4? Explain. (c) Compute the 95% confidence intervals for the estimated coefficients on x2 and x4. (d) What is the risk if we do not use the heteroskedasticity robust standard errors? 5. Suppose that you get the following regression result from a sample of 277 observations: = 4.57 +0.188x1 - 0.22x2 + 0.171x3 0.92x4 (0.25) (0.040) (0.21) (0.055) (0.33) R = 0.353 The numbers in the parentheses are the heteroskedasticity robust standard errors for the OLS estimates. 2 (a) Compute t statistics for the coefficients on x2 and x4 (The null hypothesis is that the coefficient is 0) (b) (1.96) = 0.975, where (.) is the CDF of a standard normal distribution. Given this information, explain whether x2 has a significant effect on y or not. How about x4? Explain. (c) Compute the 95% confidence intervals for the estimated coefficients on x2 and x4. (d) What is the risk if we do not use the heteroskedasticity robust standard errors?