Basic Econometric Hedonic Price Model for Housing In Yellowland - Econometric Assignment Help

Assignment Task

QUESTION 1)

Let’s assume a hedonic price model for housing in Yellowland. Prices are a function of the square meters of the land on which the house stands, the number of rooms, and CO2 emissions. Prices are expressed in yellowies (currency of Yellowland). The model is estimated as follows:

Log(price) = 9.5 +  0.6 * log (sqm_land) +  0.17 * rooms - 0.04 * log (CO2) 
N=900 
R2 = 0.52

• Interpret the intercept.
•  Interpret the coefficient on the square meter variable.                       
•  Interpret the coefficient on the rooms variable. 
• Assume a CO2 level of 3, and a land area of 400 square meters. How much is the price of the house going to increase if we extend it from 2 to 3 rooms? 
   

    
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