Use the data for the year 1990 in INFMRT.RAW for this exercise.(i) Reestimate equation, bu...

Use the data for the year 1990 in INFMRT.RAW for this exercise.

(i) Reestimate equation, but now include a dummy variable for the observation on the District of Columbia (called DC). Interpret the coefficient on DC and com¬ment on its size and significance.

= 33.86 - 4.68 log(pcinc) + 4.15 log(physic)

(20.43) (2.60) (1.51)

_.088 log(popul)

(.287)

n = 51, R2=139,R2=.084.

(ii) Compare the estimates and standard errors from part (i) with those from equation. What do you conclude about including a dummy variable for a single observation?

=23.95-.57 log(pcinc)-2.74 log(physic)

(12.42) (1.64) (1.19)

+.629 log(popul)

(.191)

n = 50, R2= .273,2 =.226s.