Provide a scatter plot between the variables price and sqmt

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Reference no: EM132163856

Econometrics and Business Statistics Assignment -

All questions should be answered clearly and in your own words.

The data file House.xlsx contains data on 1080 house prices and some other variables that may influence of house prices.

The variables are defined as follows:

price = house price, dollars.

sqmt = total living area in square meter (m2)

bdrms = number of bedrooms

age = age of house in years

Questions -

(a) Provide a scatter plot between the variables price (Y axis) and sqmt (X axis) and comment on your plot.

(b) Estimate the following linear regression model and interpret the estimate of β₂? Provide your regression output.

price_i = β₁ + β₂sqmt_i + e_i

(c) Does an increase in the total living area by one square meter increases the expected price of a house by more than 900 dollars? Test the hypothesis at the 1% significance level.

(d) Construct a 99% confidence interval for the coefficient of sqmt. Interpret this interval.

(e) Estimate the following regression model using Eviews and write down the regression equation including standard errors, t-statistics, R-squared, F-statistics and the sample size.

price_i = α₁ + α₂ sqmt + α₃ age + α₄ bdrms + ∈_i

(f) Write down the coefficient of determination and interpret it.

(g) Interpret the estimates of α₃ and α₄. Are the signs of these two estimates consistent with your expectation? Why/Why not?

(h) Test if each coefficient is significantly different from zero. Use the 5% significance level. (Critical value from EXCEL = T.INV.2T(0.05,1076)).

(i) Using the 5% significance level test the overall significance of the model. (=F.INV(0.95,3,1076)).

(j) Compute and interpret the elasticity of price with respect to sqmt for a home that is 250 square meters large, 15 years old, and has two bedrooms.

(k) At a 5% significance level test for the existence of heteroskedasticity using a White test (no cross terms). State all steps in conducting a hypothesis test for heteroskedasticity and attach your Eviews output.

(l) Re-estimate your model in question (e) with white consistent standard errors and provide your output. What changes would you notice when compare with the regression output you obtained in question (e).

(m) Compare the two models you estimated in question (b) and question (e). Choose a preferred model. Explain why?

Attachment:- Assignment & Data File.rar

Reference no: EM132163856

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Reviews

len2163856

11/11/2018 10:44:26 PM

This assignment is worth 30% of your ECON634 ?nal mark. You should submit this test in both print and electronic copies in week 14 by 4pm, Thursday15th. Assignment that are submitted only in one form WILL NOT be marked. You must include the signed assignment coversheet (available from iLearn). Please provide all relevant information including your name and student ID on the assignment coversheet. Use the econometric software, Eviews to obtain relevant regression outputs. All questions should be answered clearly and in your own words. All relevant working must be shown.

len2163856

11/11/2018 10:44:21 PM

Your assignment should be typed using a word-processing program (e.g. Microsoft Word) or a typesetting language (e.g. LaTeX) and saved as a PDF file. It is intended that students will work on the assignments independently. Students who submit an assignment that is substantially copied from another source may receive a mark of zero, and may be referred to the Faculty for further action. You must keep a copy of your assignment. Answer all questions clearly and in your own words. No extensions will be granted. There will be a deduction of 10% of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission – 20% penalty). This penalty does not apply for cases in which an application for Special Consideration (SC) is made and approved. Total marks [65 marks].

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