The Coursework should be done with SPSS or EXCEL
Write the exact title of the essay question at the top of your answer
Please see comments below in coloured font. I have also coloured in the bits you must NOT ignore.
**** Please do NOT approach this in terms of getting a part ‘done’ and then moving on to the next part. The parts relate to each other. When you have finished please go back and check the relationship of the parts to each other. The answers should be short (usually just one or two sentences) except for the last two parts. If you find yourself writing more please check
a. that what you have written does not really belong better in the last part
b. that you are not just writing out textbook material which has not been asked for (such as definitions). If you are asked to do a test or discuss a statistic it is assumed that you already know what it is.
Statistics and Econometrics
: Project Work 2011-2012
This study requires each student to compile a sample of quarterly observations, in the UK, over a period of ten years. Thus, n=40. Each student will be given a specific period and area. You will collect data on these two variables:
(1) Birth rates (BR) (2) GDP per capita (GDP) ( If you can’t find GDP per capita for Northern Ireland use UK)
1. Present your data in a table showing the names of the variables. Make sure the full definitions and sources of each variable are given. [15 marks]
This must cover which table or URL was used, what deflator was used, how data was measured (e.g at constant prices etc.) , any methods used to solve problems..e.g. interpolation,
Use of a different variable from that asked for. Please bear in mind that there is often more than one measure of the same thing on a table so you need to be precise.
2. The equation to be estimated is :
BRi = b0 + b1 GDPi+ ui (i)
Answer these questions:
(i) In terms of the literature on demand for children, what would you expect to find for the coefficient on b1 ?
(ii) Explain how you would modify the model, implied by this equation, if there is an
‘Engel curve’ relationship in the demand for children.
(iii) Why is there a constant term in the equation with no variable attached?
(iv) Why do these types of equations have a ‘u’ term ?
3. Estimate equation (i) by OLS and present the results in a suitable table
(n.b. marks will be lost for simply pasting over the computer output)
(i) Comment on result for the coefficient on the GDP variable.
(ii) Comment on the R squared statistic.
(iv) Derive estimates of the income elasticity of demand for children from your results.
Please use correct formula the slope in a linear equation is not an elasticity (unless the data are in percentages)
4. Carry out the following hypothesis tests:
(i) b0=0 against the two sided alternative at the 1% level
(ii) b1=0 against the two sided alternative at the 5% level
(iii) b0<0 against the two sided alternative at the 5% level
(iv) b1<0 against the two sided alternative at the 5% level
Please make sure you do not make mistakes with your degrees of freedom. Also make clear what your conclusion is for the second part i.e. are you concluding, or not, that there is a signficiant negative relationship.
5. Differences in the pattern of births, over the calendar year, may cause serious problems with the accuracy of your results for this model. Outline the simple ‘seasonal dummy’ method of dealing with this and apply it to your data to produce a new set of results. [10 marks]
A lengthy explanation of the dummy method is not required. You simply need to make clear you you made your dummies. In this case you MUST also do a new regression.
6. Compare your new set of results (from Q.5) with your original results (from Q.3). You may consider the following to be relevant:
(i) whether the new model offers a significant improvement in goodness of fit.
(ii) assessing whether there has been any major change in estimated income elasticity.
(iii) assessing which quarters of the year tend to have, ceteris paribus, a higher or lower birth rate than others.
This is NOT a 3-part question. The 3 items are hints to help you and get you in the mood for doing the next part properly. As we do not know in advance what will happen it is possible that your regression has changed massively ??"e.g. the sign on GDP may have totally reversed and it may have gone from a statistically sig coefficient to insignificant or vice-versa.
7. You should now write a short report of 450-600 words. This should briefly summarize your findings but most of your answer should consist of further exploration of your data
(such as collecting further explanatory variables and estimating new regressions) and suggestions for improvement of the model you have estimated. [20 marks]
possible extensions-changing dependent variable., dividing sample, adding variables, more tests, explorations of residuals. To get good marks it is essential to add some new variables.
Ideally you should arrive at some ‘preferred’ equations and put these all in one table at the beginning of the new work- then discuss what is in the table rather than scatter a variety of new efforts through the text.
DO NOT SIMPLY REPEAT LARGE CHUNKS OF THE PREVIOUS ANSWERS AS YOUR SUMMARY OF PREVIOUS WORK AS YOU CAN NOT BE GIVEN MARKS AGAIN FOR DOING THE SAME WORK!!!
The summary of previous work should just highlight the state of knowledge so far- e.g.
Is GDP +ve , -ve , significant …? Is the model showing seasonality?
There are faxes for this order.
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