Basic Econometrics - What Determines Life Expectancy - Statistics Assignment Help

Assignment Task

What determines life expectancy?
For this home assignment you will be required to model life expectancy worldwide.
Please use the file: life_expectancy.Rdata (World Bank Database – 2016 values). Please read the description at the end of this document to understand the variables. In this home assignment we are going to model life expectancy at birth (dependent variable).

QUESTION 1
Please model the determinants of life expectancy using R: We recommend that you create the log of life expectancy at birth for modelling purposes.
Include a minimum of 7 (seven) explanatory variables in the regression equation and provide a scatter plot of your dependent and independent variables (7 scatter plots). When modelling, explain each of your functional form specification choices with respect to:
Use of logarithms - should you specify a linear or logarithmic form? Why?
Economic or common sense behind the model - why do you pick this variable?
Multicollinearity – are the independent variables multicollinear?
Functional form specification (potential nonlinear relationships, eg: log-linear or quadratic relationships)
Sampling – what is the impact of your modelling choices on the sample size?

Interpret the coefficients on 5 explanatory variables. Describe if the coefficients are elasticities or semi-elasticities, or simple level variables.
Interpret the statistical significance of these coefficients using the p-values OR the t-stat.
Test for heteroscedasticity in R using the Breusch-Pagan test and copy below the results. Interpret the results of the Breusch Pagan test.
Present the results from a) using HAC robust errors! Did any of the standard errors change significantly?

Describe each of the five “Gauss Markov” assumptions, (define them) and explain in the context of the regression output in a) whether these assumptions are likely to be met in these models.

Please include the OECD dummy in the regression output, and interpret it, along with its level of significance.
Explain the practical/ policy relevance of your results in 1 paragraph. Describe a minimum of 3 policy proposals [ each 2-3 sentences] aiming at increasing life expectancy.

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