Please help Done HW 2.pdf You have collected data for 104 countries to address t
ID: 3150576 • Letter: P
Question
Please help Done HW 2.pdf You have collected data for 104 countries to address the difficult questions of the determinants for differences in the standard of living among the countries of the world. You recall from your macroeconomics lectures that the neoclassical growth model suggests that output per worker (per capita income) levels are determined by, among others, the saving rate and population growth rate To test the predictions of this growth model, you run the following regression: 3) RelPers1nc = 0.339-1 2.894x n + 1.397x SK, R2-0.621, SER = 0.177 (0.068) (3.177) (0.229) where RelPersInc is GDP per worker relative to the United States,n is the average population growth rate, 1980-1990, and SK is the average investment share of GDP from 1960 to 1990 (remember investment equals saving). Numbers in parentheses are for heteroskedasticity-robust standard errors. (a) Calculate the t-statistics and test whether or not each of the population parameters are significantly different from zero (b) The overall F-statistic for the regression is 79.11, what is the critical value at the 5% and 1% level? What is your decision on the nul hypothesis?Explanation / Answer
a) The t-ratio for intercept is: 0.039/0.068=0.5735
t-ratio for n is: -12.894/3.177=-4.0585
t -ratio for Sk is: 1.397/0.229=6.10
b) The p value is less than 0.0001.
c) The value of R^2 has increased and SER is decreased.
d) The new R^2 is 0.775. This means 77.5%, which indicates n, Sk and Educ together accounts for 77.5% variation in RelPersInc. The data inadequacy of Educ, therefore, prompts the researcher to modify the statement.