4a) Economists have tried to examine the catch up hypothesis where it is predicted that poorer...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
4a) Economists have tried to examine the catch up hypothesis where it is predicted that poorer countries will grow faster than richer countries to "catch-up" to the richer countries. To assess this hypothes is an economist regresses the growth rate of GDP (gross domestic product), gr; on log of GDP per Capita, In(gdp;) as well as a regression including other variables which might influence growth rates. The following regression results come from regressions using data from 96 countries. gri = -0.058 - 0.009 In(gdp;) + ei (0.023) (0.002) n = 96, R? = 0.122 and s = 0.025 %3D Where estimated standard errors are given in brackets. gr, is the growth rate of the ith country over the period 1985 – 1990, In(gdp;) is the logarithm of GDP for country i, e is the residual and s is the estimated standard error of the residuals. A second regression yields gr = -0.019 + 0.001 In(gdp;) + 0.12lnV; + e2i (0.023) n = 96, R? = 0.196 and s = 0.024 (0.002) %3D Where ez is the estimated residual and InV, is the ratio of investment to GDP in 1985. a) Test for each regression, the hypothes is that the coefficient on lIn(gdp;) is zero. What does the result of your tests say about the "catch-up" hypothesis? b) The R? measure is higher for equation (B) than for A. Is this what you would expect? Explain c) The regression results may be affected by heteroskedasticity. Explain what you understand about heteroscedasticity, why the estimation results might be affected by heteroscedasticity and what the effects are if heteroskedasticity is present. d) Interpret the regression results in (A) and (B), identify and explain the R? in each regression. 4a) Economists have tried to examine the catch up hypothesis where it is predicted that poorer countries will grow faster than richer countries to "catch-up" to the richer countries. To assess this hypothes is an economist regresses the growth rate of GDP (gross domestic product), gr; on log of GDP per Capita, In(gdp;) as well as a regression including other variables which might influence growth rates. The following regression results come from regressions using data from 96 countries. gri = -0.058 - 0.009 In(gdp;) + ei (0.023) (0.002) n = 96, R? = 0.122 and s = 0.025 %3D Where estimated standard errors are given in brackets. gr, is the growth rate of the ith country over the period 1985 – 1990, In(gdp;) is the logarithm of GDP for country i, e is the residual and s is the estimated standard error of the residuals. A second regression yields gr = -0.019 + 0.001 In(gdp;) + 0.12lnV; + e2i (0.023) n = 96, R? = 0.196 and s = 0.024 (0.002) %3D Where ez is the estimated residual and InV, is the ratio of investment to GDP in 1985. a) Test for each regression, the hypothes is that the coefficient on lIn(gdp;) is zero. What does the result of your tests say about the "catch-up" hypothesis? b) The R? measure is higher for equation (B) than for A. Is this what you would expect? Explain c) The regression results may be affected by heteroskedasticity. Explain what you understand about heteroscedasticity, why the estimation results might be affected by heteroscedasticity and what the effects are if heteroskedasticity is present. d) Interpret the regression results in (A) and (B), identify and explain the R? in each regression.
Expert Answer:
Related Book For
Business Forecasting with ForecastX
ISBN: 978-0073373645
6th edition
Authors: Holton wilson, barry keating, john solutions inc
Posted Date:
Students also viewed these mathematics questions
-
1. (10 points) Coulomb's law states that the Electric field generated by par- ticle with charge Q at the origin is 1 Q E(r) = 4T 0 Show that this can be generated by taking E = -V where 1 Q P(r) :...
-
The following regression results relate to a study of fuel efficiency of cars as measured by miles per gallon of gas (adjusted R-squared = 0.569; n = 120). a. Calculate the /-ratios for each...
-
Accounting Common-size statement analysis A common-size income statement for Creek Enterprises 2014 operations follows Using the firmsProvide your evaluation based on the common-size income...
-
A long, slender bar in the shape of a right circular cone with length L and base diameter d hangs vertically under the action of its own weight (see figure). The weight of the cone is W and the...
-
A method to measure soluble organic carbon in seawater includes oxidation of the organic materials to CO2 with K2S2O8, followed by gravimetric determination of the CO2 trapped by a column of...
-
Determine the t critical value for a two-sided confidence interval in each of the following situations: a. Confidence level = 95%, df = 10 b. Confidence level = 95%, df = 15 c. Confidence level =...
-
Consider the wine quality of young red wines data in Table B.19. For the purposes of this exercise, ignore regressor $x_{1}$. Perform a thorough analysis of these data. What conclusions do you draw...
-
You are designing an adder for the blindingly fast 2-bit RePentium Processor. The adder is built from two full adders such that the carry out of the first adder is the carry in to the second adder,...
-
A corporate bond with a face value of $1,000 and a coupon rate of 4.6% pays interest semiannually and has a maturity date of May 6, 2026. The trade settles on January 22, 2022. The yield to maturity...
-
Annette Creighton opened Creighton Consulting. She rented a small office and paid a part-time worker to answer the telephone and make deliveries. Her chart of accounts is as follows: Creighton's...
-
Crane Inc. had its best month of the year in September because the state government offered a tax-free holiday weekend. Ordinarily, sales tax is 5%. Total sales for that weekend were $1008000. Total...
-
Question: How does the saving rate of middle-career individuals compare with that of retirees? Please explain the economic reasoning.
-
Where on the HHI index would an industry with five companies with the following market shares be categorized? Firm A 24% Firm B 23% Firm C 20% Firm D 15% Firm E 18%
-
You have just received a bonus of 15,000 euros and have decided that you want to invest the money. After discussing your options with your bank, you have narrowed it down to two options: A. A savings...
-
what ways do feminist theorists engage with the intersectionality of gender, race, class, sexuality, and other axes of identity to analyze and challenge systems of oppression and privilege?
-
The Bank of Canada has recently increased the interest rate, and is expected to deliver further increases in the coming months. The goal of this exercise is to analyze the consequences that this...
-
= z = 0. 1. xyz(w+z) Evaluate the following logical expressions with x = y = 1 and w 2. xyz + zw 3. Zyx(1+w) Problem 2 (8 points): Indicate whether the following Boolean expressions are in...
-
Reduction in sales All of the above 29. Belt of an electric motor is broken, it needs a. Corrective maintenance b. Scheduled maintenance c. Preventive maintenance d. Timely maintenance. 30. The...
-
Go to the library and look up annual data for population in the United States from 1981 through 2004. One good source for such data is the Economic Report of the President, published each year by the...
-
Air Carrier Traffic Statistics Monthly is a handbook of airline data published by the U.S. Department of Transportation. In this book you will find revenue passenger-miles (RPM) traveled on major...
-
Norm Marks has recently been assigned the responsibility of forecasting the demand for P2CL. a coating produced by ChemCo that is used to line beer cans. He has decided to begin by trying to forecast...
-
Describe how partial and circular reasoning can be helpful or harmful in resolving ethical dilemmas.
-
Describe the various legal risks for nurses.
-
Describe the various roles of advanced practice nurses.
Study smarter with the SolutionInn App