Class Exercise 23-11-2023

Problem # 1: Explain the procedure how linear and log-linear

forms can be compared. Please find the output of linear and log-
linear models in transformed dependent variable Q~ (output) and
decide which functional form is preferred. (The chi-square CV at
5% level of significance is 3.84)
Model( 1) Modelling Q~ by OLS
The estimation sample is: 1950 - 2000
Coefficient Std.Error t-value t-prob Part.R^2
Constant 0.0102556 0.05489 0.187 0.8526 0.0007
LABOR 2.10657e-006 3.098e-007 6.80 0.0000 0.4906
CAPITAL 4.36872e-007 4.294e-008 10.2 0.0000 0.6832

sigma 0.276591 RSS 3.67211243

no. of observations 51 no. of parameters 3
mean(Q~) 1.89718 se(Q~) 1.96944
Model( 2) Modelling LQ~ by OLS
The estimation sample is: 1950 - 2000
Coefficient Std.Error t-value t-prob Part.R^2
Constant -13.0538 0.3962 -32.9 0.0000 0.9576
LLABOR 0.468332 0.09893 4.73 0.0000 0.3183
LCAPITAL 0.521279 0.09689 5.38 0.0000 0.3762

sigma 0.266752 RSS 3.41552015

no. of observations 51 no. of parameters 3
mean(LQ~) -1.32411e-009 se(LQ~) 1.38087

Problem # 2: Discuss the Return to Scale of valid model from

Problem#1 above.
Problem#3: Following is the output of an ANCOVA model, wage is
regressed on dummies ‘male’, ‘white’ race ‘nonUnion’ member
worker with given experience and education in years. Interpret
the model.

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Modelling wage by OLS-CS
The estimation sample is: 1 - 1289
Coefficient Std.Error t-value t-prob
Part.R^2
Constant -10.3699 1.278 -8.12 0.0000
0.0489
male 2.53140 0.9311 2.72 0.0066
0.0057
white 1.56448 0.5093 3.07 0.0022
0.0073
nonUnion -1.47193 0.7794 -1.89 0.0592
0.0028
male*nonUnion 0.642334 0.3113 2.0634 0.0219
0.0003
education 1.36795 0.06602 20.7 0.0000
0.2509
exper 0.166724 0.01605 10.4 0.0000
0.0776

Problem#4: Given the regression output check whether the series

“Consumption” has any seasonal pattern and/or time trend. Also
calculate the consumption in quarter 4 and quarter 3.
Modelling Consumption by OLS
The estimation sample is: 1957(1) - 1975(4)
Coefficient Std.Error t-value t-prob Part.R^2
Constant 5656.02 36.14 157. 0.0000 0.9971
Seasonal -753.117 37.79 -19.9 0.0000 0.8484
Seasonal_1 -398.622 37.76 -10.6 0.0000 0.6108
Seasonal_2 -317.285 37.75 -8.41 0.0000 0.4987
Trend 38.8206 0.6091 63.7 0.0000 0.9828

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