1
STOCK WATSON –INTRODUCTION TO ECONOMETRICS
3RD EDITION ANSWER TO EMPIRICAL EXERCISE
Empirical Exercise 6.1
Calculations for this exercise are carried out in the STATA file EE_6_1.do.
(a) The estimated regression is
‸
B
irthweight = 3432.1 253.2Smoker
The estimated effect of smoking on birthweight is 253.2 grams.
(b) The estimated regression is
‸
B
irthweight = 3051.2 217.6Smoker 30.5Alcohol + 34.1Nprevist
(i) Smoking may be correlated with both alcohol and the number of pre-natal doctor
visits, thus satisfying (1) in Key Concept 6.1. Moreover, both alcohol consumption
and the number of doctor visits may have their own independent affects on
birthweight, thus satisfying (2) in Key Concept 6.1.
(ii) The estimated is somewhat smaller: it has fallen to 217 grams from 253 grams, so
the regression in (a) may suffer from omitted variable bias.
(iii) ‸
B
irthweight = 3051.2 217.6×1 30.5×0 + 34.1×8 = 3106.4
(iv) R2 = 0.0729 and R2 = 0.0719. They are nearly identical because the sample size
is very large (n = 3000).
(c) The results from STATA are
. ** FW calculations;
. regress birthweight alcohol nprevist;
Source | SS df MS Number of obs = 3000
+ F( 2, 2997) = 82.64
Model | 54966381 2 27483190.5 Prob > F = 0.0000
Residual | 996653623 2997 332550.425 R-squared = 0.0523
+ Adj R-squared = 0.0516
Total | 1.0516e+09 2999 350656.887 Root MSE = 576.67
birthweight | Coef. Std. Err. t P>|t| [95% Conf. Interval]
+
alcohol | -103.2781 76.53276 -1.35 0.177 -253.3402 46.78392
nprevist | 36.49956 2.870272 12.72 0.000 30.87166 42.12746
This study source was downloaded by 100000842568006 from CourseHero.com on 04 -24-2022 13:56:37 GMT -05:00
https://www.coursehero.com/file/12059929/Stock-Watson-3U-EE-Solutions-EE-6-1/
STOCK WATSON –INTRODUCTION TO ECONOMETRICS
3RD EDITION ANSWER TO EMPIRICAL EXERCISE
Empirical Exercise 6.1
Calculations for this exercise are carried out in the STATA file EE_6_1.do.
(a) The estimated regression is
‸
B
irthweight = 3432.1 253.2Smoker
The estimated effect of smoking on birthweight is 253.2 grams.
(b) The estimated regression is
‸
B
irthweight = 3051.2 217.6Smoker 30.5Alcohol + 34.1Nprevist
(i) Smoking may be correlated with both alcohol and the number of pre-natal doctor
visits, thus satisfying (1) in Key Concept 6.1. Moreover, both alcohol consumption
and the number of doctor visits may have their own independent affects on
birthweight, thus satisfying (2) in Key Concept 6.1.
(ii) The estimated is somewhat smaller: it has fallen to 217 grams from 253 grams, so
the regression in (a) may suffer from omitted variable bias.
(iii) ‸
B
irthweight = 3051.2 217.6×1 30.5×0 + 34.1×8 = 3106.4
(iv) R2 = 0.0729 and R2 = 0.0719. They are nearly identical because the sample size
is very large (n = 3000).
(c) The results from STATA are
. ** FW calculations;
. regress birthweight alcohol nprevist;
Source | SS df MS Number of obs = 3000
+ F( 2, 2997) = 82.64
Model | 54966381 2 27483190.5 Prob > F = 0.0000
Residual | 996653623 2997 332550.425 R-squared = 0.0523
+ Adj R-squared = 0.0516
Total | 1.0516e+09 2999 350656.887 Root MSE = 576.67
birthweight | Coef. Std. Err. t P>|t| [95% Conf. Interval]
+
alcohol | -103.2781 76.53276 -1.35 0.177 -253.3402 46.78392
nprevist | 36.49956 2.870272 12.72 0.000 30.87166 42.12746
This study source was downloaded by 100000842568006 from CourseHero.com on 04 -24-2022 13:56:37 GMT -05:00
https://www.coursehero.com/file/12059929/Stock-Watson-3U-EE-Solutions-EE-6-1/
