Applied Econometrics

Computer Exercise

This computer exercise is meant to help you understand how R^2 changes

when adding more regressors to a regression model.

Use the data in sleep75.wf1 to investigate if there is a tradeoff between work time and

sleep time. Do the following steps.

1. - Check out the description of all the relevant variables in this exercise.
   - Write down what each of them measures as well as their units of measurement!
   …………………………………………………………………………………………………
2. - Regress sleep on totwrk ! (Remember to include a constant term in your regression.)

• A) Write down the estimated regression equation (do not forget to name the units of measurement of each variable!) along with the standard errors (SERs) of the coefficient estimates and the coefficient estimates themselves. Also, what is the sum of squared residuals (SSR) and total sum of squares (SST)?
• Write down all results and all Eviews commands you use to calculate the regression and the following: the regression model, the estimates of alpha and beta, print out a graph of the data with a regression line
• Write down answer sentences.
• B.) What is the R^2? Write down the results and the Eviews commands.
  (Remember to include a constant term in your regression.)
  ………………………………………………………………………………………………………
  (3) - Regress sleep o n totwrk and age . (Remember to include a constant term in your regression.)
• A) Write down the estimated regression equation (do not forget to name the units of measurement of each variable!) along with the standard errors (SERs) of the coefficient estimates and the coefficient estimates themselves. Also, what is the sum of squared residuals (SSR) and total sum of squares (SST)?
• Write down all results and all Eviews commands you use to calculate the regression and the following: the regression model, the estimates of alpha and beta, print out a graph of the data with a regression line
• Write down answer sentences.
• B.) What is the R^ 2 ? (Remember to include a constant term in your regression.)
  Write down the results and the Eviews commands.
  Write down an answer sentence.
  ……………………………………………………………………………………………………
  (4) - Regress sleep on totwrk, age and case , which does not mean anything and is
  simply an identifier for different observations. (Remember to include a constant term in your
  regression.)
• A.)Write down the estimated regression equation (do not forget to name the units of measurement of each variable!) along with the standard errors (SERs) of the coefficient estimates and the coefficient estimates themselves. Also, what is the sum of squared residuals (SSR) and total sum of squares (SST)?
• Write down all results and all Eviews commands you use to calculate the regression and the following: the regression model, the estimates of alpha and beta, print out a graph of the data with a regression line
• Write down answer sentences.
• B.) What is the R^ 2? (Remember to include a constant term in your regression.)
  ………………………………………………………………………………………………………
  (5) - Compare (!) the R^2s you obtain in the three cases in detail.
• What is the interpretation of each of them?
• What does this say about the regression, the data?
• How do they differ?
• Be critical !

>>> W hat is your critical conclusion ?

Price: $20.26

Solution: The downloadable solution consists of 11 pages, 926 words and 4 charts.
Deliverable: Word Document