1 Empirical Exercise 10.2 We'll be using data found below on democracy and income : http ://www . pearsonhighered . com / stock_watson Do citizens demand more democracy and political freedom as their in- comes grow ? This data contains a panel data set from 195 countries for the years 1960 , 1965 , ... 2000 . A Detailed description is included . The dataset contains an index of political freedom / democracy for each country in each year, together with data on the countrys income and various demographic controls. (The income and demographic controls are lagged five years relative to the democracy index to allow time for democracy to adjust to changes in these variables .) The double summation is the extension to double subscripts of a single summation 1. Is the data set a balanced panel ? Explain . 2. The index of political freedom / democracy is labeled Dem ind (a) What are the minimum and maximum values of Dem ind in the data set ? What are the mean and standard deviation of Dom ind in the data set ? What are the 10th , 25th , 50th , 75th , and 90th percentiles of its distribution (b) What is the value of Dem ind for the United States in 2000 ? Av - eraged over all years in the data set? (c) What is the value of Dom ind for Libya in 20007 Averaged over all years in the data set? (d) List five countries with an average value of Dom ind greater than 0.95 ; less than 0.10 ; and between 0.3 and 0.7 . 3. The logarithm of per capita income is labeled Log GDPPC . Regress Dem ind on Log GDPPC . Use standard errors that are clustered by coun try. (a) How large is the estimated coefficient on Log GDPPC ? Is the coef- ficient statistically significant