Read the R outputs below using cigarette data set and answer questions, where LNC is log...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Read the R outputs below using cigarette data set and answer questions, where LNC is log consumption; LNP is log price; LNY is log income. > # Run an OLS regression >ols summary (ols) Call: 1m (formula LNC-LNP+LNY) Coefficients: (Intercept) LNP LNY Estimate Std. Error t value Pr(>|t|) 0.9089 4.730 2.43e-05 *** 0.3246 -4.123 0.000168 *** 0.1968 0.876 0.385818 4.2997 -1.3383 0.1724 Signif. codes: 0** 0.001 0.01 0.05 0.11 (a) From the Breusch-Pagan test output below, discuss whether the error term in regression model ols is homoskedastic or heteroskedastic. Clearly write down the null/alternative hypothesis and your conclusion. > bptest (ols) studentized Breusch-Pagan test data: ols BP 6.5936, df = 2, p-value 0.037 (b) If we rejects the null hypothesis of a Breusch-Pagan test, i.e., Assumption 2 turns out to be violated, is the OLS estimator in ols unbiased? consistent? efficient? (c) Suppose we find heteroskedasticity in the regression model, what shall we do to correct it? Clearly write down the steps in details (such as what transformation is needed; what parameters need be estimated). Read the R outputs below using cigarette data set and answer questions, where LNC is log consumption; LNP is log price; LNY is log income. > # Run an OLS regression >ols summary (ols) Call: 1m (formula LNC-LNP+LNY) Coefficients: (Intercept) LNP LNY Estimate Std. Error t value Pr(>|t|) 0.9089 4.730 2.43e-05 *** 0.3246 -4.123 0.000168 *** 0.1968 0.876 0.385818 4.2997 -1.3383 0.1724 Signif. codes: 0** 0.001 0.01 0.05 0.11 (a) From the Breusch-Pagan test output below, discuss whether the error term in regression model ols is homoskedastic or heteroskedastic. Clearly write down the null/alternative hypothesis and your conclusion. > bptest (ols) studentized Breusch-Pagan test data: ols BP 6.5936, df = 2, p-value 0.037 (b) If we rejects the null hypothesis of a Breusch-Pagan test, i.e., Assumption 2 turns out to be violated, is the OLS estimator in ols unbiased? consistent? efficient? (c) Suppose we find heteroskedasticity in the regression model, what shall we do to correct it? Clearly write down the steps in details (such as what transformation is needed; what parameters need be estimated).
Expert Answer:
Answer rating: 100% (QA)
Step 12 Null hypothesis Ho error term in regression model is ... View the full answer
Related Book For
Introductory Econometrics A Modern Approach
ISBN: 978-0324660548
4th edition
Authors: Jeffrey M. Wooldridge
Posted Date:
Students also viewed these accounting questions
-
An excerpt from Excel's regression output for the data set of student marks on the second test and the final exam in a statistics course, described in Exercise 11, is shown below in Exhibit 13.48....
-
In regression modeling, for t tests about regression parameters, df = n - number of parameters in equation for the mean. a. Explain why df = n - 2 for the model y = + x. b. Chapter 8 discussed how...
-
Using the regression output from Exercise 2 identifies the error standard deviation and explains its meaning with a sentence in context In Exercise 2 Dependent variable is Goals R-square: 63.4% 5.13...
-
The estimated times (in weeks) and immediate predecessors for the activities in a project are given in the following table. Assume that the activity times are independent. (a) Calculate the expected...
-
Three police officers, including Maria Trevizo, were on patrol in Tucson, Arizona, near a neighborhood associated with the Crips gang, when they pulled over a car with a suspended registration. Each...
-
Identify a report on a major investigation of the Auditor General of Canada in 2012 that led to a major embarrassment for the federal government. How extensively was this reported in the media?...
-
If you are preparing a client for a deposition, what rules for responding to deposition questions should you review with the client?
-
Identify four potential unethical actions or inactions related to capacity planning, and the ethical principle each violates.
-
13) The growth of a population follows the model P = population after 5 months (round to nearest integer) 3000 1+11e -0.2345x where t is in months. Estimate the
-
A beam ABCD with a vertical arm CE is supported as a simple beam at A and D (see figure). A cable passes over a small pulley that is attached to the arm at E. One end of the cable is attached to the...
-
I'm researching topics concerning Current Or Emerging Technology Ethics. Here is the following: 1. Papers Objective . The objective of this paper and outline is to: Evaluate a new ethical issue (not...
-
The statement of cash flows presents the flows into which three groups of business activities? A. Operating, Nonoperating, and Financing. B. Operating, Investing, and Financing. C. Operating,...
-
Which of the following is most likely not an objective of financial statements? A. To provide information about the performance of an entity. B. To provide information about the financial position of...
-
Which of the following components of the cash flow statement may be prepared under the indirect method under both IFRS and US GAAP? A. Operating. B. Investing. C. Financing.
-
Fairplay had the following information related to the sale of its products during 2009, which was its first year of business: Under the accrual basis of accounting, how much net revenue would be...
-
At the beginning of 2009, Glass Manufacturing purchased a new machine for its assembly line at a cost of $600,000. Th e machine has an estimated useful life of 10 years and estimated residual value...
-
Based on the two moral/ethical issues of Apple Inc.'s infringement of employees' rights and large UK retailers' pandemic-related exploitation of garment industry workers. How does your own...
-
a. Determine the domain and range of the following functions.b. Graph each function using a graphing utility. Be sure to experiment with the window and orientation to give the best perspective of the...
-
Use INTQRT.RAW for this exercise. (i) In Example 18.7, we estimated an error correction model for the holding yield on six-month T-bills, where one lag of the holding yield on three-month T-bills is...
-
Use the data in CARD.RAW for this exercise. (ii) Estimate the equation by 2SLS, adding nearc2 as an instrument. Does the coefficient on educ change much? (iii) Test the single over identifying...
-
Use the data in NYSE.RAW to answer these questions. (i) Estimate the model in equation (12.47) and obtain the squared OLS residuals. Find the average, minimum, and maximum values of u] over the...
-
a. Examine how each of the following affects the natural unemployment rate. (i) The discovery of new energy resources lowers the price of energy, stimulating more industrial activities. (ii) The...
-
In a particular economy the negative oil price shock occurs in two different time periods, say 1990-1995 and 2000-2005. Assume that these two oil price shocks are similar in nature. Given the same...
-
In this problem you are asked to show that the expectations-augmented Phillips curve (derived in the text using the extended classical model) can be derived using the Keynesian model. Consider a...
Study smarter with the SolutionInn App