Please make sure you do not use the sk command in STATA instead of the JB test as the sk test is a different test of normality (not the JB test). Compute the JB test statistic by hand, using the numbers from your STATA output.

1. The file br2.dta contains data on 1080 houses sold in Baton Rouge, Louisiana, during mid-2005. We will be concerned with the selling price (PRICE), the size of the house in square feet (SQFT), and the age of the house in years (AGE). Define a new variable that measures house size in terms of hundreds of square feet, SQFT100=SQFT/100. (a) (10 points) Estimate the following equation and report the results: In(PRICE) = B. + B2SQFT100 + B3AGE+BAGE+ (b) (90 points) Compare the log-linear model above with the following linear model: PRICE =B1 + B2SQFT100 + B3AGE+ BAGES + [HINT: Look at the residual plots, the JB tests and the R-squared. You may need to refer to exercise 4.14]. Which model would you chose? 1. The file br2.dta contains data on 1080 houses sold in Baton Rouge, Louisiana, during mid-2005. We will be concerned with the selling price (PRICE), the size of the house in square feet (SQFT), and the age of the house in years (AGE). Define a new variable that measures house size in terms of hundreds of square feet, SQFT100=SQFT/100. (a) (10 points) Estimate the following equation and report the results: In(PRICE) = B. + B2SQFT100 + B3AGE+BAGE+ (b) (90 points) Compare the log-linear model above with the following linear model: PRICE =B1 + B2SQFT100 + B3AGE+ BAGES + [HINT: Look at the residual plots, the JB tests and the R-squared. You may need to refer to exercise 4.14]. Which model would you chose