Solution-Estimate the equation using weighted least squares

Estimate the equation using weighted least squares

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Reference no: EM131135293

Use the data set CRIME1 and consider the linear probability model:

arr86 = β₀ + β₁pcnv + β₂avgsen + β₃totime + β₄ptime86 + β₅qemp86 + ε

(a) Use the "describe" command and state what the definitions of each of the variables in the model are. Create the dummy variable arr86 such that it takes value 1 if number of arrests in 1986 was greater than or equal to 1, and 0 otherwise. Thus this variable is simply an indicator for whether the individual was arrested in 1986 at all or not.

(b) Estimate this model by OLS and find the fitted (predicted) values for arr86. Verify that these are strictly between 0 and 1. What are largest and smallest fitted values (make use of the "summarize" command).

(d) Use the WLS estimates to determine whether avgsen and tottime are jointly significant at the 5% level.

Attachment:- CRIME1.rar

Reference no: EM131135293

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Estimate the equation using weighted least squares

Reference no: EM131135293

Reference no: EM131135293

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