Question: (i) Add a linear time trend to equation (11.27). Is a time trend necessary in the first-difference equation? (ii) Drop the time trend and add

(i) Add a linear time trend to equation (11.27). Is a time trend necessary in the first-difference equation?

(ii) Drop the time trend and add the variables ww2 and pill to (11.27) (do not difference these dummy variables). Are these variables jointly significant at the 5% level?

(iii) Add the linear time trend, ww2, and pill all to equation (11.27). What happens to the magnitude and statistical significance of the time trend as compared with that in part (i)? What about the coefficient on pill as compared with that in part (ii)?

(iv) Using the model from part (iii), estimate the LRP and obtain its standard error. Compare this to (10.19), where gfr and pe appeared in levels rather than in first differences. Would you say that the link between fertility and the value of the personal exemption is a particularly robust finding?

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