Question: Use VOTE1 for this exercise. (i) Estimate a model with voteA as the dependent variable and prtystrA, democA, log(expendA), and log(expendB) as independent variables. Obtain

Use VOTE1 for this exercise.

(i) Estimate a model with voteA as the dependent variable and prtystrA, democA, log(expendA), and log(expendB) as independent variables. Obtain the OLS residuals, u^i

, and regress these on all of the independent variables. Explain why you obtain R2 5 0.

(ii) Now, compute the Breusch-Pagan test for heteroskedasticity. Use the F statistic version and report the p-value.

(iii) Compute the special case of the White test for heteroskedasticity, again using the F statistic form. How strong is the evidence for heteroskedasticity now?

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