+1-415-670-9189
info@expertsmind.com
Find confidence intervals for the coefficients
Course:- Microeconomics
Reference No.:- EM13149069




Assignment Help
Assignment Help >> Microeconomics

This question is concerned with the value of Major League Baseball (MLB) franchises. The data was obtained for all U.S. franchises across the 1992 to 1997 period.  

Here you do not need to run the regression; we will focus on hypothesis testing and interpretation.  The regression results are provided below, using 176 observations. The variable Franchise Value is the dependent variable.

Variable

Coefficient

Standard Error

t-stat

p-value

 

constant

52.88

13.22

4.00

0.000

***

Income

0.001

0.00057

1.75

0.083

*

Pop

3.03

0.30

10.21

0.000

***

Place

-1.83

0.75

-2.43

0.017

**

New Team

5.05

6.56

0.77

0.443

 

New Facility

17.07

3.60

4.74

0.000

***

Regid

11.98

6.97

1.72

0.088

*

Regpop

-2.90

0.64

-4.55

0.000

***

            Adjusted R-squared = 0.57

The variables are defined as follows:

Franchise Value =  the present discounted value of the team's net revenue stream at the point in time (in millions of 1997 US Dollars)

Income = City's Real Per Capita Income (1997 US Dollars);

Pop = City's population (millions);

Place = Team's final divisional standings in the previous season (min=1, max=7);

New Team = equals 1 for the first 3 years the team enters the league, 0.8 in the 4th year, 0.6 in the 5th year, 0.4 in the 6th year, 0.2 in the 7th year, and 0 beyond [we interpret this coefficient in the same manner as any other variable - increasing this variable by one whole unit (i.e. changing from zero to 1) will have some differential effect on franchise value]; 

New Facility = dummy equal to one if the team is playing in a new stadium, and zero otherwise;

Regid = dummy equal to one if the team has what the authors characterize as a "regional identity" (i.e. the 'Colorado' Rockies and the 'Florida' Marlins have a "regional identity" where the 'St. Louis' Cardinals and the 'Cincinnati' Reds do not);

Regpop = Regid * Pop = this is an "interaction term".  The authors include this variable to test the specific hypothesis of whether the effect of "regional identity" varies with market size.

a. Explain briefly how each of the variables affects the value of an MLB franchise (i.e., use the variable definitions above to interpret, in words, the coefficient estimates with regard to each variable).

b. Find 90% confidence intervals for the coefficients on Pop, Place, and Income.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Microeconomics) Materials
A firm produces a product with a fully allocated average cost equal to $20.  If the price elasticity of demand for the product is -5,what should the product price be set at?
These multiple choice questions related to Economics. The first question is about firms making normal profits in the long run would motivate new entrants into entering the i
Examine the common price setting strategies of airlines that use game theory. Predict the potential effects of such pricing strategies on the demand for seats, and conclude
Calculate the mean, median, range, and standard deviation of home price and size. For the assignment document you will submit, you can cut and paste the answers from the Analy
What's commonly used is a steam-driven catapult. Large pistons move within their cylinders, driven by steam pressure at one end, and tow the jet forward. Assume that the jet
ach sales manager then decides how to divide the cars among the independently owned dealerships in the region. Because of high demand for these cars, dealerships all want to
The total operating revenues of public transportation authority are $100 million while its total operating costs are $120 million. The price of a ride is $1, and the pric
In trip calculation, it is observed that a Wal-Mart store driver successfully made a total of 104 trips in a given period of time. During field calculation, it is shown that