Find and assess the goodness of the econometric model

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Reference no: EM132261625

Econometric Methods Assignment -

Description of the Project: Does Economic Development Improve the Infrastructure?

The aim of this assignment is to find and assess the goodness of the econometric model that describes the relationship between country's economic development measured by GDP per capita and infrastructure. The data come from World Economic Forum. Use the data on the following variables:

Label

Variable Name in the Dataset

Variable Label

 

year

Year

 

cnNumber

group(countrycode)

 

countrycode

Country code

 

country

Country

 

imfincgroup

Income group (World Bank, July 2016)

 

imfregion

Region (IMF, April 2016)

 

wefregion

World Economic Forum classification

x

GDPPC

GDP per capita (US$)

y

GCI_A_02

2nd pillar: Infrastructure

To obtain the dataset, use gciget command in Stata. First, command gciget needs to be installed by typing in Stata ssc install gciget

See the help for gciget for more information on its usage. Second, get the extract form the Global Competitiveness Index 2017-2018 by typing gciget year cnNumber countrycode country imfincgroup imfregion wefregion GCI_A_02 GDPPC

The dataset in Stata memory can now be saved locally for later use.

1. Describe the underlying data.

2. Work with data for year 2010. Fit a level-level model.

yi = β0 + β1xi + β3Di + u1i, (1)
where Di is a dummy variable for country i

1278_figure.png

Report the estimated equation (1). Interpret the estimated intercept β^0. What is the estimated effect of economic development on infrastructure? Discuss the interpretation and statistical significance of β^3. Relate the magnitudes of effects to your discussion in part 1.

3. Work with data for year 2010. Fit a level-log model.

yi = γ0 + γ1lnxi + γ3Di + u2i, (2)

where Di is defined in part 2.

Report the estimated equation (2). Interpret the estimated intercept γ^0. Why is it so different to estimated intercept β^0 in question 2? What is the estimated effect of economic development on infrastructure? Discuss the interpretation and statistical significance of γ^3. Relate the magnitudes of effects to your discussion in part 1.

4. Work with data for year 2010. Fit a level-reciprocal model.

yi = δ0 + δ1(1/xi) + δ3Di + u3i, (3)
3Di + u3i; (CW.3)

where Di is defined in part 2.

Report the estimated equation (3). Interpret the estimated intercept δ^0.  What is the estimated effect of economic development on infrastructure? Discuss the interpretation and statistical significance of δ^3. Relate the magnitudes of effects to your discussion in part 1.

5. Work with data for year 2009. Fit level-reciprocal models for three samples

(i) all countries available in 2009.

(ii) all countries available in 2009 excluding Zimbabwe.

(iii) all countries available in 2009 excluding Zimbabwe and Burundi.

Discuss if Zimbabwe and Burundi are potentially outliers. If they are, what can be done?

Proceed with all available data in 2010.

6. Test, discuss and remedy if necessary the heteroskedasticity issue in models estimated in parts 2, 3, and 4.

7. Perform the RESET test in models estimated in parts 2, 3, and 4 and discuss implications of the testing results.

8. Which of the three models estimated in parts 2, 3, and 4 is preferred from the econometric point of view?

Proceed with the model chosen in part 8.

9. [10 marks] Estimate the model that has difference in slope (by the D variable defined in part 2) in addition to the model with intercept shift (1, 2, or 3). What are your conclusions based on the heteroskedasticity and RESET tests now?

10. Explain which specification to address the research question "Does Economic Development Improve the Infrastructure?" is preferred after all.

Attachment:- Assignment File.rar

Reference no: EM132261625

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len2261625

3/19/2019 10:04:49 PM

Attempt to report on all of 10 parts that have been set (100 marks are available). Note these are not separate questions, these are parts of the integrated (unified) analysis on the topic. This means that a good report will make connections between parts where appropriate. You are permitted to work either in groups up to three or individually. I encourage you to work in groups. You can choose your teammates. Should more than one group of students submit identical answers then all parties will be awarded zero.

len2261625

3/19/2019 10:04:42 PM

Submitted work should be word-processed. Top and bottom margins must be 2.5 cm. Left and right margins must be 3 cm. The font used must be Calibri or Times New Roman, 12 point. Line spacing must be 1.5. All references must be fully cited (including any material accessed from the internet) using the Harvard APA referencing style. Do not exceed the word limit for the main part of the assignment (i.e., exclude the Title Page, the Table of Contents, the List of Abbreviations, Acronyms and Variables, the List of Tables and Figures, the List of References as well as the Appendix when counting words). The word limit does include citations in the main part. Use the Word Count dialog box to count the number of words. The number of words is also provided at the bottom of a Word document.

len2261625

3/19/2019 10:04:36 PM

In addition, you should store all relevant workings and/or calculations in an Stata do-file. If you do not submit Stata do-file, please have an understanding that I cannot assess your report. If you work in a group then you don't need to submit your report multiple times. It suffices to submit one copy of your report to Report Submission Box, and your Stata do-file to Stata do-file Submission Box. It does not matter whether it's you or your teammate who submits the coursework. On your submission file, you need to indicate your student IDs (in the submission title, and on each page of the assignment). For instance, if your student ID is 600000 and your teammate's ID is 123456, your submission title would be 600000 123456.docx (or 600000 123456.pdf) and 600000 123456.do (for Stata). Include three IDs if you work in a group of 3. You should not leave your project to the last week of the project. It is strongly recommended that you start working on your report sooner rather than later.

len2261625

3/19/2019 10:04:31 PM

Marks and Feedback - The unit team aim to achieve reliable, consistent and reproducible judgments on your work. In accordance with University regulations, each assessment is marked against a scheme that distinguishes between different levels of achievement. Marks for the coursework assignment will be available within 20 working days after the submission deadline. (In case of delayed submission, the 20 working days count starts on the submission day). Marks will be posted on the Student Portal, and your marked coursework and tutor's feedback will be available for you to access on Moodle/Turnitin once it has been marked and processed. You will be emailed when it is available, so please wait for that email before checking. If there is any delay in the processing of marks, the unit co-ordinator will communicate this to you and make arrangements for the marks to be posted on Moodle so that you receive them as soon as they are ready.

len2261625

3/19/2019 10:04:25 PM

Please note that all coursework and exam marks remain provisional until they have been confirmed by the Unit Assessment Board. Part 12 paragraph 1.4 of the Examination and Assessment Regulations makes it clear that students may not question the academic judgment of the examiners and states that any requests for a review of a mark based on such grounds alone will be dismissed. Students can only request a remark under the following circumstances: there has been a material and significant administrative error; or there has been a procedural irregularity in the assessment process as defined in the Examination and Assessment Regulations.

len2261625

3/19/2019 10:04:17 PM

Grade Criteria - Grading Criteria: The coursework mark will be an overall summary of performance across the following criteria: Knowledge of relevant theoretical models, methodologies and issues, Critical evaluation and informed argument accurately supported by evidence, Synthesis of relevant material from a range of sources, Originality of thought and analytical skill and Structure and clarity of presentation.

len2261625

3/19/2019 10:04:11 PM

The following grade criteria have been developed by the University's Department for Curriculum and Quality Enhancement to provide to give students feedback about their progress and achievement, to provide guidance to students about future course work, As below plus: Excellent work which contains relevant material and shows analysis, originality or creativity of approach and a clear, well-articulated understanding of the subject matter. Wide research incorporating up-to-date, relevant original material. Accurate citation and use of references. Excellent with few or no errors in organisation, structure, grammar, spelling, punctuation, use of diagrams and tables.

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