You are studying the rate of productivity growth of a sample of 750 crop and livestock farms in the Midwest region of the U.S. You estimated a linear model where productivity growth % was modeled as a function of farmer experience (age) and other farm-level characteristics.

You estimated the following linear model:

Productivity Growth= β0+β1x1+β2x2+β3x3++β4x4+β5x5+β6x6+β7x7+ε

The rate of productivity growth in your dataset is given in percentages. The description of the variables and the mean value of the variables in your sample are given in the table below:

Variable	Description	Mean
x1=  Crop income share	% of farm income coming from crops (as opposed to livestock)	77
x2= Size	Total acres farmed (in 10 acres)	206
x3= Percentage of rented land	% of total land rented from others	61
x4= Short-term debt to asset ratio	Short-term debt to asset ratio	0.243
x5= Long-term debt to asset ratio	Long-term debt to asset ratio	0.278
x6= Investment	Farm Investment (in thousands)	200
x7= Age	Age of the farmer (years)	50

 

You estimated the model and obtained the following results:

	Parameter	Standard deviation	p-values
Intercept	0.05	0.36	0.888
Crop income share	-0.13	0.05	0.016
Total acres (in 10 acres)	0.02	0.01	0.046
Percentage of rented land	-0.08	0.08	0.314
Short-term debt to asset ratio	0.23	0.18	0.203
Long-term debt to asset ratio	0.19	0.11	0.085
Farm Investment (in thousands)	0.08	0.04	0.044
Age	0.003	0.002	0.134

Predict the level of productivity growth (y) at the mean value of the variables - What is the productivity growth experienced by the average farmer in your sample? Show your calculations.

Answer rating: 100% (QA)

The estimated linear model is Productivity Growth 005 013 x1 002 x2 008 x3 023 x 4 019 x 5 008 x 6 ... View the full answer