In table 1, you are given the data on the demand for cigarettes in Turkey and its determinants for the 29 years (1960-1988). The definitions of the variables are as fallows :

Q = Cigarette consumption per adult (kg)

Y = Per-capita real GNP in 1968 prices in Turkish liras.

P = Real price of cigarettes in Turkish liras per kg.

ED1 = Ratio of enrollments in middle and high schools to the population 12-17 years old.

ED1 = Ratio of enrollments in universities to the population 20-24 years old.

D82 = 1 for 1982 and onward

D86 = 1 for 1986 and onward

In late 1981, health warnings were issued in Turkey regarding the hazards of cigarette smoking. In 1986 one of the national newspapers launched an antismoking campaign.

a) Estimate the model by OLS to find the impacts of anti-smoking campaigns

b) Use the data to transform to logarithm form (LQ = lnQ etc.).

c) Write down your model without using dummy variables and estimate it by OLS. Interpret your results.

d) Estimate the model by OLS by using dummy variables and interpret your results.

 

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Table 1: The demand for cigarettes in Turkey, 1960-88. Year Y P 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1985 1986 1987 1988 1.86 1.917 1.981 1.937 1.924 1.947 2.039 1.985 2.018 2.016 2.114 2.144 2.223 2.357 2.574 2.403 2.456 2.517 2.593 2.723 2.347 2.527 2.413 2.346 2,206 2.107 2.014 2.165 2.082 i 2561 2560 2652 2840 2882 2900 3167 3220 3350 3443 3546 3826 4014 4109 4304 1.362 1.363 1.361 1.454 1.62 1.688 1.664 1.76 1.812 1.984 1.996 1.926 1.875 1.869 1.913 4526 2.008 4784 2.148 4869 2.075 4906 2.347 4786 1.875 4638 2.145 4714 2.279 4808 2.392 4844 2.23 5006 2.106 5132 2.714 2.539 2.967 8.968 5409 5672 5723 ED1 0.112 0.125 0.135 0.142 0.147 0.148 0.163 0.184 0.2 0.217 0.229 0.25 0.264 0.267 0.279 0.287 0.317 0.33 0.337 0.334 0.349 0.34 0.351 0.357 0.373 0.396 0414 0.432 0.451 ED2 0.026 0.03 0.03 0.032 0.034 0.036 0.04 0.043 0.047 0.051 0.052 0.053 0.052 0.052 0.052 0.074 0.089 0.092 0.092 0.084 0.067 0.057 0.055 0.063 0.07 0.083 0.091 0.094 0.095 D82 0 0 0 OOOO 0 0 0 0 0 0 0 0 0 0 0 10 0 10 0 0 1 1 1 1 1 1 D86 10 0 000000 01 000000000000000000-- Table 1: The demand for cigarettes in Turkey, 1960-88. Year Y P 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1985 1986 1987 1988 1.86 1.917 1.981 1.937 1.924 1.947 2.039 1.985 2.018 2.016 2.114 2.144 2.223 2.357 2.574 2.403 2.456 2.517 2.593 2.723 2.347 2.527 2.413 2.346 2,206 2.107 2.014 2.165 2.082 i 2561 2560 2652 2840 2882 2900 3167 3220 3350 3443 3546 3826 4014 4109 4304 1.362 1.363 1.361 1.454 1.62 1.688 1.664 1.76 1.812 1.984 1.996 1.926 1.875 1.869 1.913 4526 2.008 4784 2.148 4869 2.075 4906 2.347 4786 1.875 4638 2.145 4714 2.279 4808 2.392 4844 2.23 5006 2.106 5132 2.714 2.539 2.967 8.968 5409 5672 5723 ED1 0.112 0.125 0.135 0.142 0.147 0.148 0.163 0.184 0.2 0.217 0.229 0.25 0.264 0.267 0.279 0.287 0.317 0.33 0.337 0.334 0.349 0.34 0.351 0.357 0.373 0.396 0414 0.432 0.451 ED2 0.026 0.03 0.03 0.032 0.034 0.036 0.04 0.043 0.047 0.051 0.052 0.053 0.052 0.052 0.052 0.074 0.089 0.092 0.092 0.084 0.067 0.057 0.055 0.063 0.07 0.083 0.091 0.094 0.095 D82 0 0 0 OOOO 0 0 0 0 0 0 0 0 0 0 0 10 0 10 0 0 1 1 1 1 1 1 D86 10 0 000000 01 000000000000000000--

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Model B For period 19601981 Income Elasticity 0732 Pric... View the full answer