Question: The variable rdintens is expenditures on research and development (R&D) as a percentage of sales. Sales are measured in millions of dollars. The variable profmarg

The variable rdintens is expenditures on research and development (R&D) as a percentage of sales.

Sales are measured in millions of dollars. The variable profmarg is profits as a percentage of sales.

Using the data in RDCHEM for 32 firms in the chemical industry, the following equation is estimated:

rdintens 5 .472 1 .321 log1sales2 1 .050 profmarg 11.3692 1.2162 1.0462 n 5 32, R2 5 .099.

(i) Interpret the coefficient on log(sales). In particular, if sales increases by 10%, what is the estimated percentage point change in rdintens? Is this an economically large effect?

(ii) Test the hypothesis that R&D intensity does not change with sales against the alternative that it does increase with sales. Do the test at the 5% and 10% levels.

(iii) Interpret the coefficient on profmarg. Is it economically large?

(iv) Does profmarg have a statistically significant effect on rdintens ?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Econometrics Questions!

3 The variable rdintens is expenditures on research and development (R&D) as a percentage of sales. Sales are measured in millions of dollars. The variable profmarg is profits as a percentage of...

Use the following information to solve the next two questions Using the data, the following equation was obtained by OLS: rantens = 2.613+.00030sales +.00000000 70sales? (-429) (.00014) (.0000000037)...

2. Consider the following estimated equation using data on 31 firms: rdintens = .528 + .325 log (sales) +.047 profmarg, (1.684) (.217) (.046) 0.098, n = = 31, R2 where rdintens is expenditures on...

The variable rdintens is expenditures on research and development (R&D) as a percentage of sales. Sales are measured in millions of dollars. The variables profmarg is profits as a percentage of...

*Number 3 ( 10pts) Say that we have the following model for avgscore, the average test score at an elementary school: avgscore=0+1expend+u where expend is the government expenditure per student, in...

The variable rdintens is expenditures on research and development (R & D) as a percentage of sales. Sales are measured in millions of dollars. The variable primary is profits as a percentage of...

Instructions : Use the textbook to guide you and answer the questions "Introductory Econometrics: A Modern Approach" (7th Edition), by Jeffrey M. Wooldridge. Code every problem and solve using R...

Q1.The global computer software industry is dominated by Microsoft Corp. and a handful of large competitors from the United States. During the early 2000s, fallout from the government's antitrust...

4 The data set BWGHT contains data on births to women in the United States. Two variables of interest are the dependent variable, infant birth weight in ounces (bwght), and an explanatory variable,...

Computational Exercises (30 Points) Instructions:To earn full credit, you must include your STATA code along with your answers to each of the following questions. 1. (Data Exercise) Download the data...

Here we examine the effects of domestic sales taxes on the market for exports, as an example of the "targeting principle." For example, in the domestic market, there are heavy taxes on the purchase...

Last month, 56 more people ordered cheese pizza from Papa Gones than people who ordered pepperoni. Write an equation to represent this situation.

To see the impact of fees over time calculate the scenario using the Mutual Fund Calculator. A new graduate decides to open up a Roth IRA account. They will initially put $ 1 , 0 0 0 into the account...

Most amusement parks in the United States charge a fixed price for admission, which includes unlimited roller coaster rides for the day. Some people attempt to ride the roller coasters as often as...