ETF2100 - Introductory Econometrics: House Price of Stockton California Assignment

Assignment Task

Question 1: Use the data of 1999 and 2000 only to estimate the next linear model and answer the associated questions below.

SP = β ₁ + β ₂ Age + u, (1)

where u is an error term. Note that the sub-index i of each variable has been suppressed in the above equation. SP = Selling Price , which is a function of Age (in years).

1. (a). Generate the descriptive statistics for SP and Age (i.e., 2 VARIABLES IN TOTAL), and report them in a table.

(b). Plot SP (y-axis) against Age (x-axis). Do you observe any pattern? 

2. Estimate the model (1) for the houses sold in Stockton

• Write down the estimated model (including estimates of the coefficients and the associated standard deviations), and comment on the estimation result using Goodness of (2 points - 1 points for reporting the results properly, and 1 point for commenting on Goodness of fit correctly)
• Plot the estimated error terms, and calculate the mean squared errors (i.e., ¹ ΣN u^2).

3. At the 5% significance level, test if Age has NEGATIVE impacts on Keep two decimals for the calculation involved. 

Question 2: Use the data of 2001 only to estimate the next linear model and answer the associated questions below.

log(SP) = β ₁ + β ₂ Baths + u, (2)

where u is an error term. Note that the sub-index i of each variable has been suppressed in the above equation.

1. (a). Generate the descriptive statistics for log(SP) and Baths (i.e., 2 VARIABLES IN TOTAL), and report them in a table. 

(b). Plot log(SP) (y-axis) against Baths (x-axis). Do you observe any pattern?

2. Estimate the model (2) for the houses sold in Stockton

• Write down the estimated model (including estimates of the coefficients and the associated standard deviations), and comment on the estimation result using Goodness of (2 points - 1 points for reporting the results properly, and 1 point for commenting on Goodness of fit correctly).
• Plot the estimated error terms, and calculate the mean squared errors (i.e., ¹ ΣN u^2).

3. At the 5% significance level, test if Baths has POSITIVE impacts on log(SP). Keep two decimals for the calculation 

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