Question
Suppose you want to analyze personal consumption expenditures by using income. However, you also believe that personal consumption expenditures might vary by gender (female-male) and
Suppose you want to analyze personal consumption expenditures by using income. However, you also believe that personal consumption expenditures might vary by gender (female-male) and marital status (married-single).
(a) By setting appropriate dummy variables, construct a regression where not only the autonomous consumption but also the marginal propensity to consume are allowed to vary by gender and marital status. In your regression, you should have the assumption that the differential effect of gender (marital status) on autonomous consumption and marginal propensity to consume is the same across two categories of marital status (gender). Once you construct your regression, derive the expected personal consumption expenditures of each group.
(b) Re-construct the regression in (a) by allowing the differential effect of gender (marital status) on autonomous consumption and marginal propensity to consume to vary across two categories of marital status (gender) and derive expected personal consumption expenditures of each group.
Suppose you want to analyze personal consumption expenditures by using income. However, you also believe that personal consumption expenditures might vary by gender (female-male) and marital status (married-single).
(a) By setting appropriate dummy variables, construct a regression where not only the autonomous consumption but also the marginal propensity to consume are allowed to vary by gender and marital status. In your regression, you should have the assumption that the differential effect of gender (marital status) on autonomous consumption and marginal propensity to consume is the same across two categories of marital status (gender). Once you construct your regression, derive the expected personal consumption expenditures of each group.
(b) Re-construct the regression in (a) by allowing the differential effect of gender (marital status) on autonomous consumption and marginal propensity to consume to vary across two categories of marital status (gender) and derive expected personal consumption expenditures of each group.
Step by Step Solution
3.29 Rating (129 Votes )
There are 3 Steps involved in it
Step: 1
A Consumption b0b1incomeb2maleb3married Consumption for married male b0b3b1incomeb2 Consumpti...Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started