Question

Do part D E and F only

Consider the following estimated equation QOL = 2.07 + 0.81 WB+ 0.33 MW + 0.12 RM (2.015) (0.421) (0.012) n = 100, R' = 0.79, R=0.778 where QOL represents quality of life, WB represents well-being, MW represents log of minimum wage and RM represents log of remittances. QOL and WB are measured on a scale from 0 to 100 percent, while MW and RM are measured in dollars. Standard errors are in parentheses. (a) Interpret the coefficient on RM (2 marks (b) Interpret Rº. (2 marks (e) Holding MW and RM fixed at 0, what is quality of life predicted to be if well-being is 5%? [3 mark (d) Test the null hypothesis that the coefficient on MW is one against the alternative that the coefficient is less than one. 15 marks (o) Test the null hypothesis that the coefficient on RM is vero against the alternative that the coefficient is greater than vero at the 1% level. 15 marks (0) Test the overall significance of the model 15 marks

Answer 1

D Ho: Brw=1 H: Bmw tl. Soi t- Brw -1 SE/Bmw) A =) t= 0.33-1 0.012 me reject the It= 55.831 since it is very large therefore will hypother's that brw=1. e) Ho BRM = 0 H: BRM 70 So; t= ßam 0.12 0.665 SE(BRM) t- It = 1.846. At d=0.01 and df = 96 teritical = 2.617 Since Itik tuitical, therefore we do not reject the wall hypother's of Brm=0 non zero Ho Bwb BRM - BMW=0 H: Atleast one is So, we will calculte F-statistic F - R ²1k-1) - - 0.7913 I-R? I (n-k) 0.21/96. 6263 119.45. 0.0022 since F-value is very high so null hypothesis, we reject the .