Question: Based on a certain data set a model is developed such that = 0.0023 + 0.051 0.0023 + 0.22 + 0.019 + 0.27

Based on a certain data set a model is developed such that

̂ = 0.0023 + 0.051 − 0.0023 + 0.22 + 0.019 + 0.27 + 0.013
(0.0012) (0.137) (0.023) (0.244) (0.08) (0.40) (0.04)

Where is binary such that = 1 means the country is developed and 0 otherwise.

TOT is the terms of trade, NX is the Net Exports, GDP is the real Gross

Domestic Product, HDI is the human development indicator, PoLS represents political stability and HCD is health care development.

5.1 Do the signs of the parameters in this model make sense according to prior expectations? (9)

5.2 Interpret the effect of each independent variable on the dependent variable.

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