Advanced Econometrics STATA/EVIEW Problem Set 1
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ADVANCED ECONOMETRIC COURSE
PART I: BASIC ECONOMETRIC MODELS
STATA/EVIEWS PROBLEM SET 1
An Empirical Investigation of the Determinants of Economic Growth
In this problem set, you explore the determinants of economic growth using the cross-country
data set (growthdata.dta). Table 1 defines the variables used in this problem set follows the
questions.
1. Table 2 presents the results of three regressions, one in each column. Estimate the
indicated regressions and fill in the values. For example, to fill in column (1), estimate
the regression with growth as the dependent variable and tradeshr and school60 as the
independent variables, using the “robust” option, and fill in the estimated coefficients and
standard errors; also compute and fill in the value of the F-statistic and p-value testing the
hypothesis that the coefficients on tradeshr and school60 are both zero. The adjusted
R2can be computed by rerunning this regression without the “robust” option.
Note: the regressions in Table 2 all exclude the observation on Malta.
2. Estimate the regression of growth against tradeshr, school60, and oil. What is the
coefficient on oil? Explain why you obtained this result.
3. Use Table 2 to answer the following questions.
a) Write the regression in column (1) in “equation form,” with the standard error below
the respective regression coefficient.
b) Explain in words what the coefficient on school60 means in regression (1).
c) Using regression (1), test the hypothesis that the coefficient on tradeshr is zero,
against the alternative that it is nonzero, at the 5% significance level. In everyday
words (not statistical terms), what precisely is the hypothesis that you are testing?
d) Does the coefficient on tradeshr differ in regressions (1), (2), and (3) in a
substantively important way, that is, is the difference between the three estimates
large in a real-world sense?
