Question

Part I. A study was conducted to determine the relationship between the number of new single family homes using annual U.S. data for the years 1959-2009: NEWHOME = 863.6 - 276.9 RECESS: +.002 POP - 8.7 INTRATE (62.0) (.0008) (9.5) NEWHOME=# of new single family homes (in thousands of homes) RECESS= 1 if economy is in recession; 0 else POP = civilian population (in thousands) INTRATE= inflation-adjusted prime rate (in %) AVERAGE NEWHOME= 1,079.5 (in thousands); AVERAGE POP = 174,060.8 (in thousands); AVERAGE INTRATE = 7.8 (in %); AVERAGE RECESS = .3. ANALYSIS OF VARIANCE - FROM MEAN (Taken from Stata Output) Model Residual Total SS 1267438 1904583 3172021 ANALYSIS OF VARIANCE TABLE (Taken from R Output) dataframe$NEWHOME Residuals Sum Sq 3172021 1904583

A. Calculate the residual associated with 1990.

Answer 1

in 1990, estimated NEWHOME=863.6-276.9RECESS+0.002POP-8.7INRATE=863.6-276.9x1+0.002x189164-8.7x10.01=877.941

hence residual= actual value of NEWHOME-estimated value of NEWHOME=894.8-877.941=16.859