3.5) deel manunl L$ auhem, (= 282,00 69.02 Reef 4M Pope 13036 Lig rn, D Me deel » Aub 0, PY 229 704 28. Dan Leh jit Cheb tet of Hy epaa Bon Alby ence helretn meneel ard acon, af, = 14) ( deereage Por manmade corsfraped vale ace) / LH) goher. manuel vg aclom Lup -L > Y= (Do est) 7 (p>, Ppl Roun tor car pri te opel CB emittion <[anessyet)s Lise ree, é Dran #2 For car AA autor oe, =0 and deo t 12 tyucstt'y,), fo (44 02 680) 1/26 yee (oabily « wir the hier ones #0, 34)-0 = £42 09-69, G0 bor Sefer mm <% A) 18,3799 96) 2 90g Ar cofer au hone as E42 Bhp more Fann 311i) thay ape net fe Sem Comets dary te Lf eo (nluente ang fli ohaivnay G now wit chwgihy ont <0 (eg Ay) Paran [we ra Sag8 Ti tamed > alg a cane thn shorts tert — (— Zhe. 3Z /5. Consider the following model D= B+ BX: +HX2+u, — E(ulX,X) = 0 Suppose that we define B to be one if D = 0, and zero otherwise and consider another model. a yp, B=1-D=wtnXitpXo+@ — E(WX,X)) =0. wax 43. p 4)‘The new slope estimates will each take on the opposite sign from when D is Fid&e the dependent variable, ie. 71 = —8, and y= — Ba % out pei wodd-ketrre- 73 = 4 : KEN fee fee b>, y, fhe ») Per ree ee ome ee ee “f Me gos Slentdord error Yard on Ot Sample Soe and? Sith. fasera tefe sams $e be ust oor at tas (y Falrtey 2 L wt fe go Ke barred by mobl VE anf exfy ~X%e F arlante./ ty : AAO Lp 6. Under the standard assumptions in linear regrebsion (random sample, correctly spec- ified model, homoskedasticity, non ar at of the error term) the OLS estimators con- verge to 0 almost surely. bee Were 8 4 fem Sf whe neton ber A meas eet of OFM ve bb org hex, Cth ca bo Pet he one, 4 Po fo i Be iB Menafeh/ns Gree Arharlahboe, areThe variable female is a dummy variable =1 if female and the variable toteoll represents the total years of college education. Based on this equation, women vou can realistically get enough years of college education so that their earnings catch up to those of men. end fyom yemen WO mer £, de yeaa wag otto a dhepea te 42. aititnal por hy dng won Lo not bere fore gin IA BADE OER 200K G9 OSH) wtichse Cetty 20,809 yey, g 4032 = 0,32, x= L060 & play heel Same creome 3. (“Two heads are better than one.”) Let ¥ be an index for project efficiency and X be the number of persons in a team working on that project. Suppose the following linear regression model with quadratic terms holds way 4p Y=80-4AX+X?4u, E(ulX)=0. nope ‘Therefore, it can be concluded that, on average, two persons per team maximises efficiency. fps 70 7 ee ip te 2 ferfile, ett eteney ued Ken cherecte Abie ont fours anty 7 ; we cond decile febde: ge fofli) fed ag Me LO bin Y wll htseote ng fh Ae fegee 4 ee 4, In multiple linear regression framework, the assun‘ption E(u|X) = 0 on the enor term can be checked by checking whether the sum of the residuals is 0 pte. “A Tha att uragh tyvn “Beene ee Spey Feta 1 Sy PE flare ome #2 ering ae Yothied carec€y eed 40 Loot” ak ceri dwak phot3 True or false? True or false? Where is the error in a false statement? The question is considered to be answered correctly if you classify a true statement as true or if you correct a false statement such that it becomes true. 1. We consider a multiple linear regression model Y = Bot A.X1 + BoX2 + u, where the error m is independent of X and follows a normel distribution with mean 0 and an unknown variance a?, Suppose we have NV observations from this model and let 8 = (40. 51,.42)” be the OLS estimator of = (40. 41, 52). Let B = (80,51, Ao)! be afiother estimator such that K(A) =, Then wow 4p Fakie. le 8d(Bo|X1, X2) < sd(BolX1, Xa) “True Growss- Marcov) bs_ Le urls ananh on O° ant’ we Vee WSS . Aggy tery ber we leo ateene oFervm ting bale than A cel tht kK et KS OMe Lane 2. Let ¥ be a metrical response variable, X a metrical predictor and D a dummy variable, also serving as a predictor. Consider the following model with interaction terms wax 4p Y= 6+ 5X +%D+8XD+u, — E(ulX,D)=0. a) Assuming that 4: 4 0, meaning that the two lines for the two categories are not parallel, then the value of the point at which the two lines intersect is y= ae is true that y* is positive if and only if 2 and 3 have positive signs. sae | mews What 0/Plar ot fn fy ve fo a napa tice it trder ky omit of poh wax dp b) Using a data set of 6763 wages for US workers the following equation has been estimated: log(wage) = 2.3 — 0.32. female + 0.50 - totcoll + 0.03» female « totcoll. T fxd5, Test (at the significance level a = 0.05) whether we should include the variable Dynan into the model at all. Provide the corresponding null hypothesis, alpha level, the test statistic, p-value, decision and interpretation, based on the output given in ‘Table 3). Wo by = at/by «0 (ble 8). Wr ane AND (e178 Uy: neiat-sith fam aati usteicled; Me ap ofth O Loa ap 7th, o sf z (Rn SR. is Rea) 6 < (22223 -2802a Jo ead 8: fork-2) ee anita 733 < ar) a or eel h = eee = 2, 83249 | 0 Foe "acto, Ore ba z£ [bokeh 008; prabue = G00, thal ® tous Uhaw G05! & Le, 6. Compare Model-1 and Model-2 2 by referring to the itoring enlthe of enenwe ne) criteria, Pro Model-1 faeces ear smb er Ail ee “85/ Model-2 731.8211 744.2078 Vl, $C - tefky Lette 8 Glos the gortnets A fa rebel El wit og rine model (tes ~/) oh fowsTle Ls bet cort$ tobbd bod aller feeble As br 7. Suppose now your instructor suggests you to add the “quadratic” effect of the pre- dictor Duzer, that iS D2y., 10 your model. Does this make sense? If yes, why? If not, why not? is, Base OR Beg OE Ts hea Lt wake, Serve fo calcula le numeric rabies fower tb 2, Prat AS fot cat rfid ho trerenye category 60 a fomer. fh borfiw eran li fog On Inereage School or ae’ AA ov A AoweD Ab, 9 Sense.4, Does the inclusion of the interaetion term into the model increase significantly the explanation of the model? Perform an appropriate test and justify your answer Lo feviebcal Sfandaca error SS kg 2 72% 9 Bibb OF MY, heme hy i ’ a a oe He ed Mo | Cae Ka, 47 for Be hen / 90 beg | LH eee A | flr fbroe hecanpe 2 bby se au ar of fi eet org ad’, = 02827 . , ; i gua © wth mferaXim ef WL: “Ae cat QZ ZUMA ware » é elon (2 302-gegy. 2028) Teas = | -8sfa h3 hes [52 9,206 ii la =4eR og he a + the moll rg Ecol corufnre Han is Doarge digress A fesdan ae ae Y, Iouk 5 0-7 poiuds Simpy weed to Look at p-vatoe vif. cortespourcling to utefaction Sesur :2 Case Study 2 — Regression with Dummy Variables and Interactions We analyze a dataset that contains information on the CO, emissions for a sample of N =88 cars. More precisely, the dataset includes the respective CO2 emissions ju g/km __ rv (diesel or super) coded as a dummy Variabl€ Dever With Deuper = Vif the fuel is super, and the coded as a dummy variable Dray 1. Consider the model with dummy variables Y = Bo + SiDeuper + B2Dnan + (Model-1), where u is independent of Duper and Dron; and u~ N(0,0?). How many different groups of cars does this model imply? Write them down explicitly! ‘ tnreoner wk 1 proofs, ae aly ditch r pancad deel» automrortre v 2. In Table 1 you can find the estimation results for Model-1. What are the estimates of the coefficients? Give an interpretation of the reported values in the given context. 1. . y: teh, 692-¥ 3, 3£3P bu 7H, JO Ryyg tH abort (» ©. 25 poruts oT Ht car user Supsr fal, than himaled CO, herectes 3 23303 p [her Cop Ss pois . eg LL the (MWer aff 7FO¢ Shan 3. Now consider the model with an interaction term e/ “ etn Cite Mittegram bef Fer thon me ot modell bak ot 2 “. ren fre. Me con see Conger fal CA hand birch “ye Coss te: stdaa Ge aye tr We Lek, Te Brass yy Ho, J ye G Org: “a CO IK "Lt si > m0 err dance Boy! He a Set iz : °° Shy atten fh Elela) <0) Lelodce ne (o; oe Snort eas pute. Manse hed, f iloted OBL gti. ~ A pois worrality is wot violated Aud ure ofso Ee lulr<) 0 slut) ae Woea(b) Interpret the effect of ‘carat’ on the price, For which values of earat is the effect positive, for which values is the effect negative? The range of carats is between 0.18 and 1.10. Be _ $634. Cy see. Fret hl LS Aird verter! No > go = SRA)” Got 2L3223% fr 6% €0 faralols wll ofen town the Hak: "9 tnd change the Urvechisn teh fein fy =2 42128, Verlex MAL hae" gut 17 the renge, $0 0 our moded, (P nill not change rts S49 Ko (8 more Phan range, mean $ we hove 1 Sin Hit meen phat by incceartng acaba reditt frap ex pastel forte gee us eer pertbes,/ @ ‘What is the expected ‘change of price if a diamond has 0.9 carat instead of 0.8 carat, but the clarity remains the same? 2, £3 0833-0,9% G28b70- £= L8 e002 + Z h = SALOU 15, 6 3re -49- : 60 706M - GiyaSS0F3 — 9 6 37D =o, WISE SP + r P ae “thu py fen RR AIR EE rg XAd_ USD / Git) Should the quadratic term of carat be included? Justify your answer! “OS pols need to Look pt shod. Prob, etd error, = 85? ; RSId 0260924 Megank fy average linrected alt btters Srom prnt value Yr Hee palue. ul the Secord well iE XR Cet, meat geimtvr S Lee > hehhe, we donot compe >, care lle be hygher a [moe gies). Bel Risley = OH2, Rhy OA CG 2G dee CA plan mort. 0-8 frdl Of becond mobl Ceol, Sefer, Cauge POS donot dumm he Paereined Ore thn! mses Liu ds me ge fo Porque Stora nerfber of rebrdlaath ime Hor ee Pout 4 cae te 44, model 2 ela Xe Fe. ee {e) Should carat be included in the model at all (i.e. both X; and X?)? Justify . your answer! —A pow uted to Look ak F-+es4 Up wep meth Le usdel i He rmstel og a whch 8 math tens < Prakue €1,20- , Mit S Hus Then IS > pe) et 4g wd ath le wohl ewe at the Same Fe (Ke ERS. Mtg :44. 05 184 poimas Econometrics I, 2. Partial, 20.12.2023 Name, Feline Mcwren ct; id Student; £23 90 BES Mi Course number: 0. SOL 1 Case Study 1 — Regression with quadratic term ‘The present data set includes prices (in 1000 USD) for 308 diamonds sold in Singapore. It includes the price-a diamond sold for in US-dollars (Y’), the number of carats (X1) and a categorization of visual clarity for each diamond. Carats are a unit of weight for diamonds, with 1 carat equalling 0.2 grams, while visual clarity is graded on a scale from 1 to 5, with 1 being the highest level of visual clarity and 5 being the lowest. This categorization is coded as 5 dummy variables D,,...,D;, with D, = 1 if the diamond belongs to visual clarity category 1 and D, = 0 otherwise, D2 = 1 if the diamond belongs to visual clarity category 2 and Dy = 0 otherwise and so forth. Dy is used as a baseline and therefore excluded from the model. 1. The following linear model Y = By + BiX1 + BpD2 + ByDs + ByDy + BsDs + u, @) u~N (0,07), wis independent of X,D2,...,Ds is fitted with R. The results (and some accompanying plots and tests) can be found in Figure 1 on page 11. (7? Souamment wuiscing Does the assumptions CB Xi, Ds Ds = Oayd homoscedasticity seem to be fulfilled in this example? Justify your answer Loos Wourosked A sticity Ake. Firat of ht, athe pola we con 0 Hak redial pot nenncaly 18 baibeted. Homorecdes hel wens, fiat they bake 40 Coates randomly log (le tg fowerner; Case LX Mears [oe rebel” gyd sno bee ii Geuhoed heoree KZ O ill con bge 2. We now estimate a new model (model 2), where we add carat squared (X?) ‘as A“ FY new predictor, i, Y = w+ 1X + WAT + 3D2 + Ds + 5Ds + Ds +4, (2) u~N (0,02), wis independent of X,,Dp,....Ds is fitted in R. The results (and some accompanying plots and tests) can be found on page 12. (a) In model (2), what is the expected price of a diamond that has 0.8 carats and a visual clarity of 3? G7 S002 +8 63026048 2.08933 -40-0.15370-2 2 Savor nu, 5074 tog haere ~OMSIP =F, P6209? thovtends oF UR detlers ze ? 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