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Econometrics Study Material

This assignment involves analyzing a dataset on job training for low-income men in the United States in 1976. The assignment requires reconstructing frequency tables and performing computations.

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Added on  2023-01-03

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This document provides study material for Econometrics, including a frequency distribution table, relevant tables, sample variance and covariance, sample regression line, population model, regression analysis, scatter plot, OLS regression output, and more. It also discusses the significance of regression coefficients and violation of assumptions. The document concludes with a regression model testing the law of demand and its implications.

Econometrics Study Material

This assignment involves analyzing a dataset on job training for low-income men in the United States in 1976. The assignment requires reconstructing frequency tables and performing computations.

   Added on 2023-01-03

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ECONOMETRICS
STUDENT ID:
[Pick the date]
Econometrics Study Material_1
Question 1
(a) Frequency distribution table
Age = < 40 Age > 40
Educ <10 1 2
Educ >= 10 1 1
(b) Relevant table
Answer
E(re78 | educ =11) 11.01
E(re78 | educ>10) = (16.46+11.01)/2 = 13.73
E(re78 | educ<10 and age >30) = (8.35+6.77)/2 = 7.56
E(re78 | educ>8 and age >= 40) = (6.77+16.46)/2 = 11.62
(c) Sample variance of Educ and sample covariance between re78 and Educ
Variance of Educ = VAR () = 4.30
Covariance between re78 and Educ3 = COVAR () = 6.57
(d) Sample regression line
2
Econometrics Study Material_2
ℜ78=(1.91∗Educ)−8.75
(e) When there is only observation 2 then we will get Error: range error message because
with one observation there would be no variation in x values. Further, the sample size is
lower than the total number of parameters that are estimated. This indicates that this
would cause violation of the 2 assumptions of the CLRM assumption (Flick,2015).
(f) Population model
ℜ78=−9+2.1 educ +u
Observation re 78 (Y) Educ (X) E(Y/X) u Predicted Y
(Y cap)
Residual
(ucap)
1 8.35 7 5.7 2.65 4.62 3.73
2 6.77 9 9.9 -3.13 8.44 -1.67
3 16.46 12 16.2 0.26 14.17 2.29
4 11.01 11 14.1 -3.09 12.26 -1.25
5 3.44 8 7.8 -4.36 6.53 -3.09
(g) The sum of random errors(u) and the residuals (e) are not the same. This is on expected
lines as the accuracy of the population model would be different in comparison to the
3
Econometrics Study Material_3

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