Economics > QUESTIONS & ANSWERS > Far Eastern University - ECON 401Stock_Watson_3U_EE_Solutions (All)

Far Eastern University - ECON 401Stock_Watson_3U_EE_Solutions

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Empirical Exercise 8.1 Calculations for this exercise are carried out in the STATA file EE_8_1.do. (a) The table shows the sample mean (Y ) and its standard error for lead and no-lead cities. The d ... ifference in the sample means is 0.022 with a standard error of 0.024. The estimate implies that cities with lead pipes have a larger infant mortality rate (by 0.02 deaths per 100 people in the population), but the standard error is large (0.024) and the difference is not statistically significant (t = 0.022/0.024 = 0.090). n Y SE(Y ) Lead 117 0.403 0.014 No Lead 55 0.381 0.020 Difference 0.022 0.024 (b) The regression is (i) The first coefficient is the intercept, which shows the level of Infrate when lead = 0 and pH = 0. It dictates the level of the regression line. The second coefficient and fourth coefficients measure the effect of lead on the infant mortality rate. Comparing 2 cities, one with lead pipes (lead = 1) and one without lead pipes (lead = 0), but the same of pH, the difference in predicted infant mortality rate is The third and fourth coefficients measure the effect of pH on the infant mortality rate. Comparing 2 cities, one with a pH = 6 and the other with pH = 5, but the same of lead, the difference in predicted infant mortality rate is so the difference is -0.075 for cities without lead pipes and -0.132 for cities with lead pipes. [Show More]

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