Using a sample of 200 countries a researcher investigates the long-run determinants of growth. He knows...
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Using a sample of 200 countries a researcher investigates the long-run determinants of growth. He knows that economic growth is determined by, among other factors, the rate of investment and the population growth. To test these predictions he estimated the following regression: Pop+ x Inv realGDP= 0.339 12.894 (0.068) (3.177) 1.397 (0.229) R²=0.621, SER=0.177 where realGDP is the real GDP per capita growth rate, Pop is the average population growth rate and average share of investment in the GDP. All variables are averages for the period 1960-2010. The numbers in parentheses are standard errors. a) Interpret the results and comment on the signs of the coefficients. Calculate the t-statistics. Do you think the coefficients are significantly different from zero? Explain the meaning of the standard error of regression (SER). b) The overall F-statistic for the regression is 79.11. The critical values at the 5% and 1% level are respectively 3.00 and 4.61. What is your decision on the null hypothesis? realGDP= In a second regression the researcher also includes for each country the average educational attainment (Educ) in the regression. He obtains the following result: 0.046 5.869 x Pop+ 0.738 (0.294) x Inv+ x Educ (0.079) (2.238) 0.055 (0.010) R²=0.775, SER=0.137 Does the inclusion of the level of education affect the previous results? Do you think the first regression (without controlling for the lelvel of education) suffers from omitted variable bias? c) One country in the sample has the following values: real GDP=0.30, Pop=0.021, Inv=0.169 and Educ=3.5. Does the regression in point (c) overpredict or underpredict the real GDP growth rate for this country? Using a sample of 200 countries a researcher investigates the long-run determinants of growth. He knows that economic growth is determined by, among other factors, the rate of investment and the population growth. To test these predictions he estimated the following regression: Pop+ x Inv realGDP= 0.339 12.894 (0.068) (3.177) 1.397 (0.229) R²=0.621, SER=0.177 where realGDP is the real GDP per capita growth rate, Pop is the average population growth rate and average share of investment in the GDP. All variables are averages for the period 1960-2010. The numbers in parentheses are standard errors. a) Interpret the results and comment on the signs of the coefficients. Calculate the t-statistics. Do you think the coefficients are significantly different from zero? Explain the meaning of the standard error of regression (SER). b) The overall F-statistic for the regression is 79.11. The critical values at the 5% and 1% level are respectively 3.00 and 4.61. What is your decision on the null hypothesis? realGDP= In a second regression the researcher also includes for each country the average educational attainment (Educ) in the regression. He obtains the following result: 0.046 5.869 x Pop+ 0.738 (0.294) x Inv+ x Educ (0.079) (2.238) 0.055 (0.010) R²=0.775, SER=0.137 Does the inclusion of the level of education affect the previous results? Do you think the first regression (without controlling for the lelvel of education) suffers from omitted variable bias? c) One country in the sample has the following values: real GDP=0.30, Pop=0.021, Inv=0.169 and Educ=3.5. Does the regression in point (c) overpredict or underpredict the real GDP growth rate for this country?
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ANSWER a The regression equation is as follows Real GDP is equal to 0339 12894 people and 0229 investments A higher population growth rate is linked t... View the full answer
Related Book For
Basic Business Statistics Concepts And Applications
ISBN: 9780132168380
12th Edition
Authors: Mark L. Berenson, David M. Levine, Timothy C. Krehbiel
Posted Date:
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