Safiatou DOUMBIA

Practice 1
Ken PARK
485W Seminar in Applied Econometrics

1. Estimate the regression equation and report the estimated regression eq.

Estimate the regression equation : (see eviews) LOG(Y)= C(1)+C(2)*LOG(X)

Report: LOG(Y)= β1  +  β2  LOG (X)+ ut

LOG(Y)= 0.361211019075+0.860431075208*LOG(X)+ ut
(0.295197) (0.058135)

2. Interpret the R2

About 92% of the variations in LOG(Y) can be explained by the independent variable X.

Out p-value = 0 and our alpha = 0.05. Thus, alpha=0.05>p-value=0.

Therefore, The hypothesis reject H0 and significant also the statistical distance between 0 and t-statistic can

be ignorable.

Also, it is coefficient significant because coefficient=0.860431> p-value=0

3. Interpret the S.E of regression.

SE of regression should not be above 10% or 15% of the mean of the dependent variable.

Here the mean of the dependent variable is 4.725054 and the SE of regression is 0.064790.

Therefore, the model fit well to the dependent variable because the SE regression is 1.4% <

10% of the mean of the dependent variable. (S.E./mean of the dependent

variable=0.064790/4.725054= 0.0137).

4. Interpret the slope coefficient.

It’s a log-log regression, therefore

If we change x by 1%, we’d expect y to change by 0.860431 %

 5. Estimate ln(yt)= β1  +  β2  (xt)+ ut  and interpret the slope coefficient. 

LOG(Y)= 3.83803593906+0.00539713003475*X+ ut

It’s a log-level regression, therefore

If we change x by 1 (unit), we’d expect our y variable to change by 100*(0.005397)

6. Estimate yt= β1  +  β2  log (xt)+ ut  and interpret the slope coefficient. 

Y = -372.842951959+96.2910890462*LOG(X)+ ut

It’s a level-log regression , therefore

If we increase x by one percent, we expect y to increase by (96.29109/100) units of y."

7. Estimate yt= β1  +  β2  xt+ ut  and interpret the slope coefficient. 

Y = 15.1164087251+0.610888903407*X+ ut

It’s a level-level regression, therefore

If you change x by one, we’d expect y to change by 0.610889.

8. Estimate yt= β1  +  β2  xt+ β3  xt2  + ut  and determine if there’s non-linear relationship
between y and x.

Y=26.6570580452+0.463221897188*X+0.000445363539418*X^2

In a nonlinear relationship, the trend line of Y plotted against an X-variable is not a straight line, but rather it is a curved

line because the equation is a polynomial of second degree.

9. What is the correlation coefficient between y and x?

The correlation coefficient between y and x is the coefficient of X^2 therefore 0.000445>0
(positive).

(see eviews)
10.