Carry out the f test for the joint hypothesis

Reference no: EM13212363

Wooldridge Problem 4.6 In section 4.5, we used as an example testing the rationality of assessments of housing prices. There, we used a log-log model in price and assess. Here, we use a level-level formulation.

i. In the simple regression model Price = f0 + f1assess + u the assessment is rational if f1 = 1 and f0 = 0. The estimated equation is price= -14.47 + .976assess (16.27) (.049) n = 88, SSR = 165,644.51, R2 = .820. First, test the hypothesis that H0: f0 = 0 against the two-sided alternative. Then, test H0: f1 = 1 against the two-sided alternative. What do you conclude?

ii. To test the joint hypothesis that H0: f0 = 0 and H0: f1 = 1, we need the SSR in the restricted model. This amounts to computing pricei - assessi)2 where n = 88, since the residuals in the restricted model are just pricei - assessi.. (No estimation is needed for the restricted model because both parameters are specified under H0.) This turns out to yield SSR = 209,448.99. Carry out the F test for the joint hypothesis.

iii. Now, test H0: f2 = 0, f3 = 0, and f4 = 0 in the model Price = f0 + f1assess + f2lotsize + f3sqrft + f4bdrms + u The R-squared from estimating this model using the same 88 houses is .829.

iv. If the variance of price changes with assess, lotsize, sqrft, or bdrms, what can you say about the F test from part (iii)?

Reference no: EM13212363

Questions Cloud

What would happen to equilibrium price and quantity of latte : If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls Both the equilibrium price and quantity would increase. Both the equilibrium price and qua..

Calculate rate of heat transfer : The heat transfer coefficient in the oven is 25W/m^2K. Calculate rate of heat transfer per m^2 area.

Determine the rate of heat loss from the steam pipe : Taking the temperature of the surrounding surfaces to be 20°C also, determine the rate of heat loss from the steam pipe.

Find the exergy fluxes including direction associated : In a refrigerator 1 kW is removed from the -10 degree C cold space and 1.3 kW is moved into the 30 degree C warm space. Find the exergy fluxes including direction associated with the two heat transfers.

Carry out the f test for the joint hypothesis : Now, test H0: f2 = 0, f3 = 0, and f4 = 0 in the model Price = f0 + f1assess + f2lotsize + f3sqrft + f4bdrms + u The R-squared from estimating this model using the same 88 houses is .829. iv. If the variance of price changes with assess, lotsize, sqrf..

Use the bisection method to determine the drag coefficient : Use the bisection method to determine the drag coefficient (cd) needed so that a 80 kg bunjee jumper has a velocity of 36 m/s after 4 s of free fall.

State a synthesis to make trans2ethyl3(1oxoethyl)oxirane : Using butane as your only carbon source, please propose a synthesis to make trans-2-ethyl-3-(1-oxoethyl)oxirane. any common reagent

Select the proper heat exchanger from american industrial : Select the proper heat exchanger from American Industrial Heat Transfer Inc. company. Check whether the pressure drop on the shell side is within allowable pressure drop of 20 psi.

Determine the overall heat transfer coefficient : The diameter of the tube is 13 cm and its length is 60 m. Determine the overall heat transfer coefficient of this heat exchanger using (a) LMTD and (b) -NTU method.

User Account

All Pages