Applied Econometrics 2nd Edition Dimitrios Asteriou, Stephen G. Hall - Solutions

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Using the following set of data, construct a stem-and-leaf plot. Follow the model in the Next Steps section of the chapter to set up the stem and add the leaves. 3.5 2.0 4.0 3.5 2.0 2.5 4.5 4.0 3.0 3.5 3.0 3.0 4.0 4.5 2.5 3.5 3.5 3.0 2.5 3.5 3.5 2. Refer to the stem-and-leaf plot you created for
Using the following set of data, construct a stem-and-leaf plot. For each score, use the first digit for the stem and the second digit for the leaf. For values under 10, use 0 as the stem and single digit for the leaf.34 1 16 20 33 31 28 25 18 29 33 24 34 35 5 27 30 34 35 27 36 35 10 28 20 23 387
If you have a Facebook account, you are allowed to have up to 5000 friends. At that point, Facebook cuts you off, and you have to “unfriend”people to add more. Imagine you collected data from Facebook users at your university about the number of friends each has.
A researcher collects data on the ages of college students. As you have probably observed, the distribution of age clusters around 19 to 22 years, but there are extremes on both the low end (high school prodigies) and the high end (nontraditional students returning to school).
Referring to the histogram in Figure 2-1, how many countries had 1 or 2 volcanoes?
Referring to the grouped frequency table in Table 2-6, how many countries had at least 30 volcanoes?
On a test of marital satisfaction, scores could range from 0 to 27.
In what way are stem-and-leaf plots similar to histograms?
What are potential benefits of using a stem-and-leaf plot as opposed to a histogram?
What is the difference between a histogram and a bar graph?
Assessing charitable organizations: Many people do research on charitable organizations before deciding where to donate their money. Tina Rosenberg (2012) reported that traditionally many people have used sources such as Charity Navigator or the Better Business Bureau’s Web sites. Both of these
Ability and wages: Arcidiacono, Bayer, and Hizmo (2008) analyzed data from a national longitudinal survey called NLSY79, which includes data from more than 12,000 men and women in the United States who were in the 14- to 22-year age range in 1979. The researchers reported that ability is related to
Experiments, HIV, and cholera: Several studies have documented that people who are HIV-positive are susceptible to cholera (likely because of having a weakened immune system). Researchers in Mozambique (Lucas et al., 2005), a country where an estimated 20% to 30% of the population is HIVpositive,
Romantic relationships: Goodman and Greaves (2010) reported findings from the Millennium Cohort Study, a large research project in the United Kingdom. They stated that “while it is true that cohabiting parents are more likely to split up than married ones, there is very little evidence to suggest
Outliers and response time: Imagine that a researcher is measuring the time it takes participants to identify whether a string of letters constitutes a word (e.g., duke) or a nonword (e.g., dake). She measures the response time of 40 participants. She finds that most participants took from 0 to 1
Outliers, exercise, and weight gain: Imagine that you conducted the study described in Exercise 1.36 and that one person had gained many, many pounds while in the exercise program.
Experimental versus correlational research and recycling: A study in Argentina concluded that grocery store customers were more likely to bring their own bags when stores charged for plastic bags than when stores did not charge (Jakovcevic et al., 2014). Imagine that you want to design a follow-up
Experimental versus correlational research and culture: A researcher interested in the cultural values of individualistic and collectivist societies collects data on the rate of relationship conflict experienced by 32 people who test high for individualism and 37 people who test high for
Correlational research and smoking: For decades, researchers, politicians, and tobacco company executives debated the relation between smoking and health problems such as cancer, with tragic consequences?
Between-groups versus within-groups and exercise: Noting marked increases in weight across the population, researchers, nutritionists, and physicians have struggled to find ways to stem the tide of obesity in many Western countries. They have advocated a number of exercise programs, and there has
Operationalizing the earnings of comedians: In 2013, Forbes reported the 10 top-earning comedians, and all 10 were men—Louis C.K., Kevin Hart, and Larry the Cable Guy among them. A number of online journalists wanted to know why there were no women on the list. Erin Gloria Ryan of Jezebel, for
Operationalizing variables and rap statistics: The Web site Rap Genius analyzes rap music using what they call RapMetrics(http://rapgenius.com/posts/63-Introducing-rapmetricstm-the-birth-ofstatistical-analysis-of-rap-lyrics). It has developed a measure called rhyme density, which is the proportion
Reliability, validity, and wine ratings: You may have been in a wine store and wondered just how useful those posted wine ratings are. (They are usually rated on a scale from 50 to 100, with 100 being the top score.) After all, aren’t ratings subjective? Corsi and Ashenfelter (2001) studied
Reliability and validity: Go online and take the personality test found at http://www.outofservice.com/starwars. This test assesses your personality in terms of the characters from the original Star Wars movies.
Discrete versus continuous variables: For each of the following examples, state whether the scale variable is discrete or continuous.
Types of variables and the Kentucky Derby: The Kentucky Derby is perhaps the premier event in U.S. horse racing. For each of the following examples from the derby, identify the type of variable—nominal, ordinal, or scale.
Types of variables and Olympic swimming: At the 2012 London Summer Olympics, American Michael Phelps won 4 gold medals, bringing his overall Olympic career total to 18 gold medals, the all-time career record for Olympic gold medals in any sport. One of the events he won was the 100-meter butterfly.
Sample versus population in Norway: The Nord-Trøndelag health study surveyed more than 60,000 people in a Norwegian county and reported that gastrointestinal symptoms, depression, and anxiety disorders are strongly related (Haug, Mykletun, & Dahl, 2002).
Average weights in the United States: The CDC reported very large weight increases for U.S. residents of both genders and all age groups over a period of four decades. Go to the Web site that reports these data(http://www.cdc.gov) and search for the article titled “Americans Slightly Taller, Much
Referring to the previous exercise, what might be the purpose of an outlier analysis in this case? What might it reveal?
Since 1980, most of the cyclists who have won the Tour de France have won it just once. Several cyclists have won it two or three times in a row. The Spanish cyclist Miguel Induráin won it five times in a row, and the U.S. cyclist Lance Armstrong won it seven consecutive times (although he was
A study of the effects of skin tone (light, medium, and dark) on the severity of facial wrinkles in middle age might be of interest to cosmetic surgeons.
A researcher might be interested in evaluating how a person’s physical and emotional distance from Manhattan at the time of the 9/11 terrorist attacks relates to the accuracy of memory about the event.
In the fall of 2008, the U.S. stock market plummeted several times, with grave consequences for the world economy. A researcher might assess the economic effect this situation had by seeing how much money people saved in 2009. That amount could be compared to the amount people saved in more
As they leave a popular grocery store, 73 people are stopped and the number of fruit and vegetable items they purchased is counted.
A researcher studies the average distance that 130 people living in U.S.urban areas walk each week.
Over the course of 1 week, a grocery store randomly selected 100 customers to complete a survey about their favorite products. Identify the sample and population for this example.
University bookstore employees asked 225 students to complete a customer satisfaction survey after these customers bought their books. The bookstore manager wanted to find ways to improve the customer experience.Identify the sample and population for this example.
A researcher studies the number of hours 2500 Canadians work out every week. Identify the sample and the population for this example.
What are potential benefits of outlier analysis?
When John Snow investigated the 1854 outbreak of cholera in London, he paid particular attention to outliers. What is an outlier?
The following statements are wrong but can be corrected by substituting one word or phrase. (See the instructions in Exercise 1.13.) Identify the incorrect word or phrase in each of the following statements and supply the correct word.
In statistics, it is important to pay close attention to language. The following statements are wrong but can be corrected by substituting one word or phrase. For example, the sentence “Only correlational studies can tell us something about causality” could be corrected by changing
What is the difference between a between-groups research design and a within-groups research design?
What is the difference between experimental research and correlational research?
In your own words, define the word experiment—first as you would use it in everyday conversation and then as a researcher would use it.
To test a hypothesis, we need operational definitions of the independent and dependent variables. What is an operational definition?
What is the difference between reliability and validity, and how are the two concepts related?
What is the relation between an independent variable and a dependent variable?
Describe two ways that statisticians might use the word scale.
Identify and define the four types of variables that researchers use to quantify their observations.
What is the difference between a sample and a population?
What is the difference between descriptive statistics and inferential statistics?
The files Norway.wf1, Sweden.wf1 and Finland.wf1 contain data for GDP and various financial proxies as in the computer example for the UK case presented in this chapter. For each of these countries, test for cointegration among the pairs of variables by applying both the EG and the Johansen
Use the file in Exercise 17.2 and verify your results by using the Johansen approach.Include all three variables in a multivariate Johansen cointegration test. What is your result? Can you identify the cointegrating vector(s)?
The file cointegration.wf1 contains data on three variables (x, y and z). Test the variables for their order of integration and then apply the EG approach to the three different pairs of variables. In which of the pairs do you find cointegration?
The file korea_phillips.wf1 contains data for wages and unemployment for the Korean economy. Test for cointegration between the two variables using the EG approach and comment on the validity of the Phillips curve theory for the Korean economy.
Is it possible to have two I(1) variables and two I(2) variables in a Johansen test for cointegration, and to find that the I(2) variables are cointegrated with the I(1)?Explain analytically
State the drawbacks of the EG approach, and discuss these with reference to its alternative (that is the Johansen approach).
Explain step by step how can one test for cointegration using the Engle–Granger (EG)approach.
What are the features of the ECM that make it so popular in modern econometric analysis?
What is the error-correction model? Prove that the ECM is a reparametrization of the ARDL model.
Why is it necessary to have series that are integrated of the same order to make cointegration possible? Give examples.
Explain the meaning of cointegration. Why is it so important for economic analysis?
Discuss analytically the three stages involved in the Box–Jenkins process for ARIMA model selection.
Define and explain the concepts of stationarity and invertibility. Why are they important in the analysis of time series data? Present examples of stationary and non-stationary, invertible and non-invertible processes.
Define the concepts of stationarity and invertibility and state the conditions for stationarity in the AR models and invertibility for the MA models.
Explain the implication behind the AR and MA models by giving examples of each.
The file ARIMA.wf1 contains quarterly data for the consumer price index (cpi) and gross domestic product (gdp) of the UK economy. Follow the steps described in the example for the Box–Jenkins approach regarding gdp for the cpi variable.
Show that an MA(1) process can be expressed as an infinite AR process.
The file cons_us.wf1 contains data on consumption expenditure (CE) and personal disposable income (PDI) (measured in constant prices) for the US economy.(a) Estimate the partial adjustment model for CE by OLS.(b) Provide an interpretation of the estimated coefficients.(c) Calculate the implied
The model:CEt = β1 + β2YDt + β3CEt−1 + vt (10.41)(where CE = aggregate consumer expenditure and YD = personal disposable income)was estimated by simple OLS using data for the UK economy. The results are given in Table 10.2. Is this model a satisfactory one? Explain (using the adaptive
Assume we have the following distributed lag model:Yt = 0.847 + 0.236Xt + 0.366Xt−1 + 0.581Xt−2+ 0.324Xt−3 + 0.145Xt−4 (10.40)Find (a) the impact effect, and (b) the long-run effect of a unit change in X on Y.
Show how the Koyck transformation transforms an infinite distributed lag model into an autoregressive model. Explain the advantages of this transformation.
Explain how we can test for serial correlation in autoregressive models.
Derive the Almon polynomial transformation for p = 5 and r = 4. Explain how to proceed with the estimation of this model.
Show how we might obtain an estimate of the marginal propensity to consume out of expected income, despite not having the data for expected income, using the adaptive expectations autoregressive model.
Describe the Hendry Approach in choosing an appropriate econometric model.Discuss its advantages.
What is the use of the Box–Cox transformation? Explain through an example.
Show how the plug in solution can resolve the omitted variable bias. Provide an example from the economic theory.
The file product.wf1 contains data for the following variables, q = quantity of a good produced during various years, p = price of the good, f = amount of fertilizer used in the production of this good and r = amount of rainfall during each production year.Estimate a regression equation that
The file investment.wf1 contains data for the following variables, I = investment, Y = income and R = interest rate. Estimate a regression equation that has investment as the dependent variable, and income and the interest rate as explanatory variables. Check for autocorrelation using both the
Describe the steps of the DW test for autocorrelation. What are its disadvantages and which alternative tests can you suggest?
Explain how autocorrelation can be resolved when ρ is unknown.
Explain the consequences of autocorrelation and how they can be resolved when ρis known.
What is autocorrelation? Which assumption of the CLRM is violated, and why?
Use the data in the file houseprice.xls to estimate the following equation:price = b0 + b1lotsize + b2sqrft + b3bdrms + u (6.43)(a) Check whether there is evidence of heteroskedasticity.(b) Re-estimate the equation but this time instead of price use log(price) as the dependent variable. Check for
The file sleep.xls contains data for 706 individuals concerning sleeping habits and possible determinants of sleeping time. Estimate the following regression equation:sleep = b0 + b1totwrk + b2educ + b3age + b4yngkid + b5male + u (6.42)(a) Check whether there is evidence of heteroskedasticity.(b)
Use the data in police.wf1 to estimate the equation that relates the actual value of the current budget (Y) with the expected value of the budget (X). Check for heteroskedasticity in this regression equation with all the known tests described in this chapter.
Use the data in Greek_SME.wf1 to estimate the effect of size (proxied by number of employees) on the profit/sales ratio. Check whether the residuals in this equation are heteroskedastic by applying all the tests for detection of heteroskedasticity (both formal and informal) described in this
Use the data in the file houseprice.wf1 to estimate a model of:pricei = β1 + β2sqfeeti + ui Check for heteroskedasticity using the White and the Goldfeld–Quandt tests. Obtain GLS estimates for the following assumptions: (a) Var(ui) = σ 2sqfeeti and (b) Var(ui) = σ 2sqfeet2 i . Comment on the
Define heteroskedasticity and provide examples of econometric models where heteroskedasticity is likely to exist.
Consider the following model:Yi = β1 + β2X2i + β3X3i + ui where Var(ui) = σ 2X2i. Find the generalized least squares estimates.
When applying WLS and where the weight is an explanatory variable of the original model, discuss and show mathematically the problem of interpreting the estimated coefficients.
Show how the weighted least squares can be applied in order to resolve heteroskedasticity.
Describe the Goldfeld–Quandt test for detection of heteroskedasticity.
Briefly state the consequences of heteroskedasticity in simple OLS.
Use the data in the file money_uk02.wf1 to estimate the parameters α, β and γ , in the equation below:ln(M/P)t = a + β ln Yt + γ ln R1t + ut where R1t is the 3-month treasury bill rate. For the rest of the variables the usual notation applies.(a) Use as an additional variable in the above
The file imports_uk_y.wf1 contains yearly observations of the variables mentioned in Exercise 5.1. Repeat Exercise 5.1 using the yearly data. Do your results change?
The file imports_uk.wf1 contains quarterly data for imports (imp), gross domestic product (gdp) and the consumer price index (cpi) for the USA. Use these data to estimate the following model:ln impt = β1 + β2 ln gdpt + β3 ln cpit + ut Check whether there is multicollinearity in the data.

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Applied Econometrics 2nd Edition Dimitrios Asteriou, Stephen G. Hall - Solutions

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