3. Say that Shweta is impatient to get started on applied work, but she only kno

Question

3. Say that Shweta is impatient to get started on applied work, but she only knows econometrics only up to what we have covered in 558 thus far. As a result, she only is able to estimate at most the two-variable regression model. However, her boss in the research ect she is working on has in mind a three-variable model to try to estimate the sensitivity of consumption (C) to income, and since it is the boss, let's say this is the DGP/true model: proj Since Shweta knows that Income grows with Age (so it will be larger for older people), and she wants to get some empirical results to show her boss, she invents the following estimation procedure: First, to get rid of the influence of Age on Income, Shweta estimates the following mod and she keeps the set of fitted residuals 0,Income,-RAge, as the part of Income not explained by Age. In the second step of Shweta's procedure, she then estimates (a) In terms of the DGP, what, if anything, does from Shweta's procedure estimate (be sure to show derivations, and explain the steps involved in your work).

Explanation / Answer

It will estimate the monthly disposable income of the person. Monthly disposable income generally indicated the income which is left after covering all the necessary expenses like food, clothing existing debts ets.

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.