Question: 13.25 Based on data from 63 counties, the following model was estimated by least squares: yn = 0.58 - 0.052x1 10.0192 - 0.005x2 10.0422 R2

13.25 Based on data from 63 counties, the following model was estimated by least squares:

yn = 0.58 - 0.052x1 10.0192

- 0.005x2 10.0422 R2 = 0.17 where yn = growth rate in real gross domestic product x1 = real income per capita x2 = average tax rate, as a proportion of gross national product The numbers below the coefficients are the coefficient standard errors. After the independent variable X1, real income per capita, was dropped from the model, the regression of growth rate in real gross domestic product on X2, average tax rate, was estimated. This yielded the following fitted model:

yn = 0.060 - 0.074x2 10.0342 R2 = 0.072 Comment on this result.

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