OLS model - Black Non-Hispanic - R/RStudio - Economics Assignment Help

Economics Assignment Help

1. Estimate  the OLS model  to predict loan  approval while controlling  for Income, Loan2Income, CoApplicant,  Black, Asian, Hispanic, and Female.
2. What  is the  predicted  probability  of approval for  a Black non-Hispanic  female applicant with a  co-applicant, earning $100  thousand per year and requesting  a loan of $200 thousand?
3. Use  the “subset”  command to limit  your analysis to approved  loans. The sample size will  be 98,127.AP <-subset(NY, Approved==1):  Estimate the OLS model to predict loan  amount (a continuous variable) while controlling  for Income, CoApplicant, Black, Asian, Hispanic, Female.  Note that Loan2Income is not a regressor.
4. I  claim  that (a)  blacks are  less likely to  be approved for a  mortgage than other people  of similar income and demography  but (b) conditional on being approved  they actually receive substantially larger  loans. Use the statistical results to analyze  these two hypotheses.
5. Use  the predict  command to get  the predicted value  and the residual for  all 98,127 observations.  The commands will be similar  toAP$Predict <-predict(model)AP$Resid  <-resid(model): What is the variance of  the prediction? What is the variance of  loan amount?
6. Show  how the  two variances  are used to produce  the R-squared value of  0.5568?
7. What  is the  correlation  of loan amount  and the prediction?
8. Re-estimate  your model using  a“log-log” specification.  Use log(AP$Loan) as the dependent  variable and log(AP$Income) as a regresssor.  Include the other variables (for Co-Applicant,  Black, Asian, Hispanic, and Female) without making  any transformations.
9. I  claim  that for  every percentage  point increase in  income, the loan amount  also increases by one percentage  point. Economists call this unit elasticity.  Use the log-log model to evaluate this hypothesis.
10. What  is the  interpretation  of the Hispanic  variablein the log-log  regression model? Be specific  about the units.

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