Do you appear to have omitted variables

Assignment Help Econometrics

Reference no: EM13212826

Assume that you've been hired by the surgeon general of the United States to study the determinants of smoking behavior and that you estimate the following cross-sectional model based on data for all 50 states (standard errors in parentheses): Ci^ = 100 - 9.0E+ 1.0i - 0.04T - 3.0V + 1.5R (3.0) (1.0) (0.04) (1.0) (0.5) t = -3.0 1.0 -1.0 -3.0 3.0 where Ci = number of cigarettes consumed per day per person in the ith state E = ave. yeras of education for persons over 21 in the i-th state I = average income in the ith state (thousands of dollars) T = tax per package of cigarettes in the i-th state (cents) V = the number of video ads against smoking aired on the five largest radio networks in the ith state **I only need help with c, d, and e.

a. Develop and test (at the 5-percent level) appropriate hypotheses for the coefficients of the variables in this equation.

b. Do you appear to have any irrelevant variables? Do you appear to have omitted variables? Explain your answer.

c. Let's assume that your answer to part b was 'yes' to both. Which problem is more important to solve first -- irrelevant variables or omitted variables? Why?

d. One of the purposes of running the equation was to determine the effectiveness of antismoking advertising on television and radio. What is your conclusion?

e. The surgeon general decides that tax rates are irrelevant to cigarette smoking and orders you to drop the variable from your equation. Given the following results, use our four specification criteria to decide whether you agree with her conclusion. Carefully explain your reasoning (standard errors in parentheses): Ci^ = 101 - 9.1E + 1.0i -3.5V + 1.6R (3.0) (0.9) (1.0) (0.5) Sum of R^2 = .40 N = 50 (states)

Reference no: EM13212826

Questions Cloud

What can be said about the expected defect rate : Given that the nominal diameter (per print) is 15.00mm +/-0.10mm, what can be said about the expected defect rate?

Define galvanized nails are iron nails that have been plated : Galvanized nails are iron nails that have been plated with zinc to prevent rusting. The relevant reaction isZn2+(aq)+2e??Zn(s)

Ownership of various forms of intellectual property : Discuss this issue with your group and prepare a 2 page management brief for Acme's upper management group

What is pressure of o2 would be required to have a solution : What pressure of O2 would be required to have a solution of 1.5X10^-3g of O2 in 250g of H2O at 298K?

Do you appear to have omitted variables : estimate the following cross-sectional model based on data for all 50 states (standard errors in parentheses): Ci^ = 100 - 9.0E+ 1.0i - 0.04T - 3.0V + 1.5R (3.0) (1.0) (0.04) (1.0) (0.5) t = -3.0 1.0 -1.0 -3.0 3.0 where Ci = number of cigarettes c..

Valid option from the point of view of net present value : What discount rate is rehabilitation not a valid option from the point of view of net present value and design life of the asset and be completed within a few months of commencement.

Define solutions of a non-voliatile electrolyte solure : The osmotic pressure of 0.010M solutions of a non-voliatile electrolyte solure "a" and a non-volitale non-electrolyte solute "b" are 0.605 atm and 0.235 atm respectively

Calculate the nominal interest rate : For each of the expected inflation rates of 0, 2, 4, 6, and 8 percent, calculate the nominal interest rate and the after-tax expected real interest rate if the tax rate is 30 percent. Suppose that the Fisher hypothesis holds for an economy.

Define what is the molar mass of x : What is the molar mass of X if 0.85g of X depresses the freezing point of 100g of benzene by 0.47Cdegrees?

User Account

All Pages