Access the eurodata2a.xls dataset in the Documents Library. This file contains i
ID: 3239289 • Letter: A
Question
Access the eurodata2a.xls dataset in the Documents Library. This file contains information about unemployment and wage growth in Belgium and Denmark. The dummy variable Belgium is set to 1 in Belgium and 0 in Denmark. Use Excel to perform a regression on Wage Growth vs. Unemployment, Belgium, and BE*Unemployment.
Write out the full estimated regression equation.
Write out the estimated regression equation for Belgium.
Write out the estimated regression equation for Denmark.
How does a one percentage point increase in unemployment relate to the growth rate of wages in Belgium?
How does a one percentage increase in unemployment relate to the growth rate of wages in Denmark?
Estimate the difference in how unemployment relates to wage growth between the two countries.
Provide a 95 % confidence interval for the difference in how unemployment relates to wage growth between the two countries.
Predict the growth rate in wages for each country in a year that has 3 % unemployment.
Wage Growth Unemployment Rate BE* Unemployment Rate Belgium 3.3 1.9 1.9 1 7.4 1.8 1.8 1 8.1 1.6 1.6 1 9.9 1.4 1.4 1 9.6 1.6 1.6 1 8.8 1.7 1.7 1 7.5 2.4 2.4 1 6.4 2.8 2.8 1 8.5 2.2 2.2 1 9.3 1.8 1.8 1 12.2 1.7 1.7 1 14.2 2.2 2.2 1 13.5 2.2 2.2 1 18 2.3 2.3 1 16.5 4.2 4.2 1 15.8 5.5 5.5 1 9.1 6.3 6.3 1 7.2 6.8 6.8 1 5.8 7 7 1 10.6 7.4 7.4 1 7 9.4 9.4 1 7.3 11 11 1 6.3 10.7 10.7 1 7.3 10.8 10.8 1 4.7 10.1 10.1 1 3.6 10 10 1 2.2 9.8 9.8 1 2.4 8.8 8.8 1 6.1 7.4 7.4 1 7 6.6 6.6 1 7.7 6.4 6.4 1 5.7 7.1 7.1 1 4.7 8.6 8.6 1 4.4 9.8 9.8 1 2.1 9.7 9.7 1 1.4 9.5 9.5 1 3 9.2 9.2 1 1.7 9.3 9.3 1 3.3 8.6 8.6 1 2.5 6.9 6.9 1 3.6 6.7 6.7 1 4.1 7.3 7.3 1 12.9 1.2 0 0 11.1 1.2 0 0 4.6 1.6 0 0 10.7 1.2 0 0 13.8 0.9 0 0 10.2 1.1 0 0 11.1 1 0 0 10.1 1 0 0 11.3 0.9 0 0 11.3 0.6 0 0 12 0.9 0 0 8.6 0.8 0 0 13.6 0.7 0 0 18.8 2.8 0 0 14.4 3.9 0 0 12 5.1 0 0 10.1 5.9 0 0 9.7 6.6 0 0 10.1 4.6 0 0 10.6 4.9 0 0 9.7 7.9 0 0 12.2 8.4 0 0 8.7 8.4 0 0 6.2 7.9 0 0 5.4 6.7 0 0 5 5 0 0 8.5 5 0 0 5.6 5.7 0 0 4.2 6.8 0 0 4 7.2 0 0 3.9 7.9 0 0 4.1 8.6 0 0 2.3 9.6 0 0 1.5 7.7 0 0 3.1 6.7 0 0 3.6 6.3 0 0 3.5 5.2 0 0 3.4 4.9 0 0 3.7 4.8 0 0 3.6 4.4 0 0 5.2 4.3 0 0 3.5 4.5 0 0Explanation / Answer
full estimated regression equation is
Wage Growth = a+b*Unemployment+ c*BE*Unemployment+ d*Belgium
Wage Growth = 11.80-0.8269*Unemployment+0.094*BE*Unemployment-0.1532*Belgium
estimated regression equation for Belgium
estimated regression equation for Denmark
If one percentage point increase in unemployment relate, we predict the the growth rate of wages in Belgium will decrease by approximately 0.7329.
If one percentage point increase in unemployment relate, we predict the the growth rate of wages in denmark will decrease by approximately 0.82699.
Estimate the difference in unemployment relates to wage growth between the two countries is -0.1532
5 % confidence interval for the difference in unemployment relates to wage growth between the two countries is (-3.17, 2.87).
Predict the growth rate in wages for each country in a year that has 3 % unemployment
Wage Growth = 11.6489-0.7329*Unemployment = 11.6269
Wage Growth = 11.80-0.8269*Unemployment = 11.775
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 11.80212 1.023651 11.52944 1.1E-18 9.764992 13.83925 Unemployment Rate -0.82699 0.192911 -4.28688 5.02E-05 -1.21089 -0.44308 BE* Unemployment Rate 0.094087 0.251223 0.374516 0.709011 -0.40586 0.594037 Belgium -0.1532 1.519459 -0.10083 0.91994 -3.17702 2.870618