Table 9-5, on the textbook's Web site, gives data on five socioeconomic indicators for a sample of 20 countries, divided into four per-capita income categories: low-income (up to $500 per year), lower-middle income (annual income between $500 and $2200), upper-middle income (annual income between $2300 and $5500), and higher-income (over $5500 a year). The first five countries in the table belong to the first income category, the second five countries to the second income category, and so on.
a. Create a regression using all five independent variables. A priori, what do you expect the impact of the population growth rate (X4) and daily calorie intake (X5) will be on infant mortality rate (Y)?
b. Estimate the preceding regression and see if your expectations were correct.
c. If you encounter multicollinearity in the preceding regression, what can you do about it? You may undertake any corrective measures that you deem necessary.