Estimate a linear probability model, Applied Statistics

Assignment Help:

Estimate a linear probability model:

Consider the multiple regression model:

y = β01x1+.....+βkxk +u

Suppose that assumptions MLR.1-MLR4 hold, but not assumption MLR.5

(a) Are the standard t and F-statistics valid if the sample is suf?ciently large? If not, what would you do about it?

(b) Suppose that the sample is very small. What is the implication for the heteroscedas-tic robust standard errors? Suppose that someone said that you instead should use Feasable Generalized Least Squares to correct for heteroscedasticity in small samples. What would be your response?

(a) Estimate a linear probability model that explains whether a man was arrested in 1986 by his prior criminal and employment record (pcnv, avgsen, tottime, ptime86, qemp86). Use robust standard errors. Why do you need to correct for heteroscedasticity? Justify

(b) What is the interpretation of the intercept?

(c) Interpret the effect of time locked up in 1986 (ptime86) on the probability of arrest. Is this a big effect?

(d) Set all explanatory variables to zero, except for ptime86, and compute the predicted probability of arrest in 1986 for a man who was locked up in all 12 months in 1986. Does this prediction make sense?

(e) Test whether avgsen and tottime are jointly statistically signi?cant at the 5% level. Would your test be valid if you had not used robust standard errors in (a)?

(f) Calculate the predicted probabilities and verify that all the ?tted values are between 0 and 1. What is the smallest value you observe? And the largest?


Related Discussions:- Estimate a linear probability model

Sample standard deviation, Sample Standard Deviation So far, we discu...

Sample Standard Deviation So far, we discussed the population standard deviation. Now, let us switch to sample standard deviation(s) that is analogous to the population stand

Calculate unbiased estimate of the variance, This question has two parts wi...

This question has two parts with multiple items to answer. You are a psychologist who has collected the subjective well-being scores of a number of elderly people aged 90 or abo

Mode for grouped data, Grouped Data For calculating mode from a...

Grouped Data For calculating mode from a frequency distribution, the following formula   Mode = L mo +  x W where,

Harmonic mean, The Harmonic Mean is based on the reciprocals of numbers ave...

The Harmonic Mean is based on the reciprocals of numbers averaged. It is defined as the reciprocal of the arithmetic mean of the reciprocal of the given individual observations. Th

Estimation error on apparent arbitrage, This question explores the effect o...

This question explores the effect of estimation error on apparent arbitrage opportunities in a controlled simulation setting. We simulate returns for N = 10 assets over T = 30 year

Evaluate the standard deviation, Use only the rare event rule, and make sub...

Use only the rare event rule, and make subjective estimates to determine whether events are likely. For example, if the claim is that a coin favors heads and sample results consis

Simple linear regression, Simple Linear Regression   While correlati...

Simple Linear Regression   While correlation analysis determines the degree to which the variables are related, regression analysis develops the relationship between the var

Simple linear regression model, A study was conducted to determine the amou...

A study was conducted to determine the amount of heat loss for a certain brand of thermal pane window. Three different windows were randomly subjected to each of three different ou

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd