Basic Econometrics & Natural Logarithm - Economics Assignment Help

Assignment Task

QUESTION 1

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

Log(price) = 12.09 +  0.6 * log (sqm_land) +  0.28 * rooms - 0.09 * log (NOX) 

N=800 

R2 = 0.3

1. Interpret the intercept 

2.  Interpret the coefficient on the square meter variable.

3. Assume a NOX level of 4, and a land area of 500 square meters. How much is the price of the house going to increase if we extend it from 2 to 3 rooms? 

4. Calculate the degrees of freedom associated with these estimates. Is this high enough for standard normal critical values to be applied?

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