Econometrics Solutions: Christopher Dougherty Introduction To

You have a sample of 100 workers. Model: log(wage) = β1 + β2 educ + β3 exper + β4 tenure + u. Results: b2=0.075 (se=0.010), b3=0.008 (se=0.002), b4=0.012 (se=0.005). R²=0.32. Test whether return to education is greater than 5% at the 1% level.

Using DW test with lagged dependent variables – the manual explains the Durbin h-test as an alternative. Chapter 10: Simultaneous Equations Typical problem: Supply and demand model. Why is OLS biased? Show using reduced form. Christopher Dougherty Introduction To Econometrics Solutions

Find dL and dU from tables. If d < dL → reject null of no autocorrelation. The manual also shows the relationship ( d \approx 2(1-\hat\rho) ) and how to use the Cochrane–Orcutt iterative procedure. You have a sample of 100 workers