15.3 Another way to estimate the model in Exercise 15.2 is to pool all the observations and use dummy variables for each of the years 1960, 1970, and 1980.

(a) If you estimate the model this way, what different assumptions are you making about the error terms, relative to the assumptions made for Exercise 15.2.

(b) The results for the estimated dummy variable model appear in Table 15.11.

Report the estimated equation. Comment on any differences or similarities with the estimateso btainedi n Exercise 15.2.

(c) Does the RESET test suggest the equation is misspecified?

Table 15.11 Dummy Variable Regression Model for Exercise 15.3 Dependent Variable: G Included observations: 258 Variable Coefficient Std. Error 1-Statistic Prob. D60 0.031527 0.014673 2.148656 0.0326 D70 0.020514 0.015297 1.341000 0.1811 D80 0.002896 0.015794 0.183381 0.8546 POP -0.436464 0.182325 -2.393881 0.0174 INV 0.162829 0.020750 2.847380 0.0000 IGDP -1.43E-06 9.42E-07 -1.516792 0.1306 SEC 0.014886 0.009759 1.525366 0.1284 R 0.406 SSE = 0.094778 Ramsey RESET Test: F-statistic 1.207756 p-value = 0.300612