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  • Practice Exercise RMII

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    Kemale Zamanli
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    The regression model estimates the headcount ratio (logHC19) as a function of several independent variables. 1) The estimated equation is logHC19 = -0.4097*logRE + 7.88*logGC + 0.7286*Democracy - 0.0042*CPI - 0.4235*Political_risk + 0.0123*logGDP - 26.7351. 2) Using a 15% significance level, all variables except CPI and logGDP are statistically significant. 3) The confidence interval for the predicted headcount ratio, given specified values for the independent variables, is estimated to be between -1

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    The regression model estimates the headcount ratio (logHC19) as a function of several independent variables. 1) The estimated equation is logHC19 = -0.4097*logRE + 7.88*logGC + 0.7286*Democracy - 0.0042*CPI - 0.4235*Political_risk + 0.0123*logGDP - 26.7351. 2) Using a 15% significance level, all variables except CPI and logGDP are statistically significant. 3) The confidence interval for the predicted headcount ratio, given specified values for the independent variables, is estimated to be between -1

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    84 views1 page

    Practice Exercise RMII

    Uploaded by

    Kemale Zamanli
    The regression model estimates the headcount ratio (logHC19) as a function of several independent variables. 1) The estimated equation is logHC19 = -0.4097*logRE + 7.88*logGC + 0.7286*Democracy - 0.0042*CPI - 0.4235*Political_risk + 0.0123*logGDP - 26.7351. 2) Using a 15% significance level, all variables except CPI and logGDP are statistically significant. 3) The confidence interval for the predicted headcount ratio, given specified values for the independent variables, is estimated to be between -1

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    of 1

    Question 1. Consider following regression output and answer questions based on it.

    Source SS df MS Number of obs = 82


    F( 6, 75) = 68.52
    Model 251.2112 6 41.8685333 Prob > F = 0.0000
    Residual 45.8297557 75 .61106341 R-squared = 0.8457
    Adj R-squared = 0.8334
    Total 297.040955 81 3.66717229 Root MSE = .78171

    logHC19 Coef. Std. Err. t P>|t| [95% Conf. Interval]

    logRE -.4097141 .0805309 -5.09 0.000 -.5701398 -.2492883


    logGC 7.884002 .8048537 9.80 0.000 6.280651 9.487353
    Democracy .7286182 .1033253 7.05 0.000 .5227837 .9344528
    CPI -.0042173 .0094681 -0.45 0.657 -.0230788 .0146441
    Political_risk -.4234574 .1910594 -2.22 0.030 -.8040672 -.0428475
    logGDP .01238 .0162977 0.76 0.450 -.0200868 .0448467
    _cons -26.73515 3.274291 -8.17 0.000 -33.25788 -20.21243

    Headcount Ratio at 1.9$ - HC19 CPI – Consumer Price Index


    Remittance Inflow – RE
    Gini Coefficient – GC

    a) Write estimated equation of Headcount ratio variable and interpret each coefficient.

    b) Check significance of each independent variable by using 15% significance level. Formulate Null and
    Alternative Hypothesis for each.

    c) Construct confidence interval for dependent variable by using given information on regression.
    Assume that logRE=1.42, logGC=2.31 , Democracy = 1, CPI=12 , Political risk=0.2 and logGDP=2.3.
    Interpret interval.

    d) Interpret value of R square. Does this model have higher predictive power?

    e) Test joint significance of all independent variables. Formulate respective Hypothesis.

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