Reference no: EM132201034
Question: On the text website: pearsonhighered, you will find the data file Growth, which contains data on average growth rates from 1960 through 1995 for 65 countries, along with variables that are potentially related to growth. A detailed description is given in Growth_Description, also available on the webstie. In this excercise, you will investigate the relationship between growth and trade.
a. Construct a scatterplot of average annual growth rate (Growth) on the average trade share (TradeShare). Does there appear to be a relationship between variables?
b. one country, malta, has a trade share much larger than the other countries. Find Malta on the scatterplot. Does malta look like an outlier?
c. using all observations, run a regression on 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 .5 and with a trade share equal to 1.0.
d. Estimate the same regression, excluding the data from Malta. Answer the same questions in (c).
e. Plot the estimated regression functions from (c) and (d) using the scatterplot in (a),explain why the regression function that includes Malta is steeper than the regression function that excludes Malta.
f. Where is Malta? Why is the Malta trade share so large? Should Malta be included or excluded from the analysis?