Directions: Download the dataset available on the class website and answer the following questions_ The dataset consists of 100 observations. The equation to be estimated will take the following (PRE) form bellow. There is a violation of one of the CLNRM assumptions. You're job is to follow the questions, identify it, and correct for it. (Hint Be organized and methodological. The violation is pretty obvious

provided you know what to look for)

\({{Y}_{i}}={{\beta }_{0}}+{{\beta }_{1}}X{{1}_{i}}+{{u}_{i}}\)

1. Estimate the PRF and examine the results. Identify the 'problem' using informal

(graphical) techniques. Record the estimated results, and briefly describe what

graphs you considered and bow they helped you identify the problem.

2.. Given your answer to question 1. Identify the problem again using formal

(statistical testing) techniques. Briefly describe what tests you conducted, and

give the results of the only test that helped you identify the problem.

3. Now that you have identified the problem, fix it. In other words, you must

transform the dataset such that a new dataset now satisfies all of the CLNRM

assumptions. Estimate your new dataset, give the results, and verify that the

problem you identified is no longer present in the transformed data (i.e. repeat

parts 1 and 2 on this new dataset and show that the initial problem is gone).

Price: $29.749999999999996

Solution: The downloadable solution consists of 6 pages, and 281 words
Deliverable: Word Document and pdf