Econometrics Assignment

BANGOR UNIVERSITY

AND

MANAGEMENT DEVELOPMENT INSTITUTE OF SINGAPORE

Course : Bachelor of Science (Hons) in Business Studies & Finance

(BSFD1 1812A, BSFD2 1812A, BSFD5 1803A)

Module Code and Title : ASB3317 Econometrics

Module Tutor : Ms Sheilvy Dewi Soetanto

Assessment : Group Assignment

Due Date : 18 September 2019

Word Length : 2,000 words

Weighting within Module : 40% (100 marks)

Your completed assignment should be submitted to blackboard (Turnitin) and a hard copy on

the reception of the College Administrative Center by 17:00 on 18th September 2019. There

will be a penalty for late submission. The electronic submission should be in Word

Document. The data required for the assignment are provided on the module webpage. It is a

group assignment of max 3 members. Your answer should be no more than 2000 words

(excluding bibliography, notes, tables, figures and equations).

For all questions you should provide screen print outs of STATA where necessary to support

your workings. Marks for each question are listed in brackets.

BSFD11812A, BSFD21812A, BSFD51803A_ ASB3317 Econometrics, Group Assignment: 18 September 2019 Page 2 of 3

Question 1 (40 marks)

The data file Growth contains data on average growth rates from 1960 through 1995 for 65

countries, along with variables that are potentially related to growth. You are asked to

investigate the relationship between growth and trade.

a. Using all observations, run a regression of Growth on TradeShare. What is the estimated

slope? What is the estimated intercept? Use the regression to predict the growth rate for a

country with a trade share of 0.5 and with a trade share equal to 1.0. (12 marks)

b. Estimate the same regression, excluding the data from Malta. Answer the same question

in part (a). (12 marks)

c. Is the estimated regression slope statistically significant? This is, can you reject the null

hypothesis H0: β1 = 0 at the 10%, 5%, or 1% significance level? (6 marks)

d. What is the p-value associated with the coefficient’s t-statistic? (2 marks)

e. Construct a 90% confidence interval for β1. (8 marks)

Question 2 (30 marks)

a. Using the data in hprice1, estimate the following model:

price = β0 + β1 lotsize + β2 sqrft + β3 bdrms

Investigate the hypothesis that lotsize, sqrft, and bdrms affect price. (10 marks)

b. Test for the presence of heteroskedasticity. (20 marks)

BSFD11812A, BSFD21812A, BSFD51803A_ ASB3317 Econometrics, Group Assignment: 18 September 2019 Page 3 of 3

Question 3 (30 marks)

Use the data set Birthweight_Smoking, which contains data for a random sample of babies

born in Pennsylvania in 1989. The data include the baby’s birth weight together with various

characteristics of the mother, including whether she smoked during pregnancy. In this

exercise you will investigate the relationship between birth weight and smoking during

pregnancy.

a. In the sample:

i. What is the average value of Birthweight for all mothers? (3 marks)

ii. For mothers who smoke? (3 marks)

iii. For mothers who do not smoke? (3 marks)

b. i. Use the data in the sample to estimate the difference in average birth weight for

smoking and non-smoking mothers. (3 marks)

ii. What is the standard error for the estimated difference in (i)? (3 marks)

iii. Construct a 95% confidence interval for the difference in the average birth weight for

smoking and non-smoking mothers. (6 marks)

c. Run a regression of Birthweight on the binary variable Smoker.

i. Estimate the slope and intercept. (3 marks)

ii. Is the estimated regression slope statistically significant? Can you reject the null

hypothesis H0: β1 = 0 at the 10%, 5%, or 1% significance level? (6 marks)

END OF ASSIGNMENT