Theoretical Problems & Linear Model With Gauss-Markov Assumptions -Economics Assignment Help

Assignment Task

2 Computer Based Problems 

1. Growth and Trade. Professors Ross Levine, Thorsten Beck and Norman Loayza studied 

the determinants of economic growth. They used the data set "Growth.dta," which contains information on average growth rates over 1960-1995 for 65 countries, along with variables that are potentially related to growth. In this exercise you will investigate the relationship between growth and trade. Below is a table describing the variables in this data: 

• Variable 
• Definition Country name Name of country 
• growth 

Average annual percentage growth of real Gross Domestic Product (GDP)* 

from 1960 to 1995. rgdp60 The value of GDP* per capita in 1960, converted to 1960 US dollars tradeshare The average share of trade in the economy from 1960 to 1995, measured as 

the sum of exports plus imports, divided by GDP; that is, the average value of (X+M/GDP from 1960 to 1995, where X= exports and M= imports (both X 

and M are positive). yearsschool Average number of years of schooling of adult residents in that country in 

1960 rev_coups Average annual number of revolutions, insurrections (successful or not) and 

coup d'etats in that country from 1960 to 1995 assassinations Average annual number of political assassinations in that country from 1960 

to 1995 (per million population) oil = 1 if oil accounted for at least half of exports in 1960 

= 0 otherwise 

(a) Construct a scatterplot of average annual growth rate (growth) on the average trade share (tradeshare). Does there appear to be a relationship between the variables? Run a regression of growth on tradeshare, excluding Malta. What is the estimated slope? Is it significantly different from zero at the 5% level? And at the 10% level? Use the estimated relationship to predict the growth rate for a country with trade share of 0.5 and with trade share equal to 1.1.

(b) Run a regression of growth on tradeshare, yearschool, rev.coups, assassination and rdgp60. What is the value of the coefficient on tradeshare? Is it statistically differ ent from zero at the 5% level? How does the coefficient compare to the simple regression estimate in item a?

(c) Use the regression to predict the average annual rate of growth for a country that has average values for all regressors. Repeat the prediction but now assume the country's value for tradeshare is one standard deviation above its mean.

(d) Test whether taken as a group yearschool, rev.coups, assassination and rdgp60 can be omitted from the regression.

(e) What happens if you incude Oil in the regression in the item a? Why? Provide your do file and log file as part of your submission. 

This Economics Assignment has been solved by our Economics Experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment Experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.