i Preview File Edit View Go Tools Window Help 74 % Tue 14:41 a E A. H. Studenmun

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i Preview File Edit View Go Tools Window Help 74 % Tue 14:41 a E A. H. Studenmund-Using Econometrics-A Practical Guide (7th Edition)-Pearson (2016), pdf (page 278 of 578)-Edited v Q Search A. H. Studenmund-Using Econ- 625 ,450 073 629 Regression Run 8.7: df lumber of obs = E(5, Prob > F R-squared Adj R-squared 0.5036 Root MSE 65 59)13.99 0.0000 0 . 5424 276 Model 1271126.11 5 254225.223 Residual 1072480.04 59 18177 6278 Total I 2343606.15 64 36618.8462 134.82 SAT I (95% Conf. Interval] 3.16 0.002 2.18 0.034 1.65 0.104 17.00876 177.4471 1.24 0,220 211.0153 183,0178 47.47242 GPA 129.2439 40.86539 APMAT1 95.35163 43.81128 APENGI 80.21916 48.58978 ESL -47.03944 37.94402 7.685451 122.9653 28. 88638 347.3616 835.0478 PREP34.82031 38.71083 -0.90 0,372 -112.2805 42.63988 cons! 591 . 2047 121.8609 4.85 0.000 Answer each of the following questions for this regression run. oll Evaluate this result with respect to its economic meaning, overall fit, and the signs and significance of the individual coefficients. a. 277 b. What econometric problems (out of omitted variables, irrelevant variables, or multicollinearity) does this regression have? Why? If you need feedback on your answer, see hint 8 in the material on this chapter in Appendix A. c. Which of the following statements comes closest to your recommenda- tion for further action to be taken in the estimation of this equation? i. No further specification changes are advisable (go to page 272). ii. I would like to drop ESL from the equation (go to run 8.4). i. I would like to drop PREP from the equation (go to run 8.2) iv. I would like to add GEND to the equation (go to run 8.12) v. I would like to add RACE to the equation (go to run 8.14) If you need chapter in Appendix A. feedback on your answer, see hint 18 in the material on this

Explanation / Answer

We seee the results are

a. Evaluate this result with respect to its economic meaning, overall fit, and the signs and significance of the individual coefficients.

The r square value is 0.5424 , this means that the model is able to explain 54.24% variation in the data .
The signficant F is less than 0.05 and is 0.000 , this means that the model is stratisitcally significant and is not by chance

The negative coeffecients for variables
ESL
PREP
indicate that the dependent variable decreases when the independent variable increases (and vice versa)

We also see that the p value of ESL, PREP and APENG are all greater than 0.05 , hence these variables are not signficant and can be dropped from the regression equation as they do not contribute signifcantly towards the regression model

b. What econometric problems (out of omitted variables, irrelevant variables, or multicollinearity) does this regression have? Why?

Omitted variables are
APENG
ESL
PREP

There doesnt appear to be multicollinearity in the regression output. It can be detected when the overall model is signficant but none of the independent variables are signficant
Here 2 variables , GPA and APMATH are significant , so is the model

Please note no explaination on econometric problems can be given without the background information of the problem , which is not given

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