Question: 11. Reconsider the presidential voting data (fairdat) introduced in Exercise 2.14. (a) Estimate the regression model voTE : h -l zGROWTH + $3INFL ATION *

11. Reconsider the presidential voting data (fairdat) introduced in Exercise 2.14.

(a) Estimate the regression model voTE : h -l \zGROWTH + $3INFL ATION * e Report the results in standard format. Are the estimates for B2 and 9: significantly different from zero at a lOVo significance level. Did you use one-tail tests or two-tail tests? Why?

(b) Predict the percentage vote for the incumbent party when the inflationrate is 4Vo and the growth rate is -4To.

(c) Supposethattheinflationrateis4%oandthegrowthrateis-4Yo.Alsoassumethat 9r : h and B3 : bs. For what values of B2 will the incumbent party get the majority of the vote. Using this range of values as the null hypothesis, test the hypothesis that the incumbent party will get the majority of the vote against the alternative that it will not.

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