Question

E6.2 Using the data set Growth described in Empirical Exercise E4.1, but excluding the data for Malta, carry out the following exercises. a. Construct a table that shows the sample mean, standard deviation, and minimum and maximum values for the series Growth, TradeShare, YearsSchool, Oil, Rev_Coups, Assassinations, and RGDP60. Include the appropriate units for all entries. b. Run a regression of Growth on Trade Share, YearsSchool, Rev_Coups, Assassinations, and RGDP60. What is the value of the coefficient on Rev_Coups? Interpret the value of c. Use the regression to predict the average annual growth rate for a country that has d. Repeat (c) but now assume that the country's value for Trade Share is one standard e. Why is Oil omitted from the regression? What would happen if it were included? this coefficient. Is it large or small in a real-world sense? average values for all regressors deviation above the mea.

Answer 1

E6.2 Using the data set Growth described in Empirical Exercise E4.1, but excluding the data for Malta, carry out the following exercises. a. Construct a table that shows the sample mean, standard deviation, and minimum and maximum values for the series Growth, TradeShare, YearsSchool, Oil, Rev_Coups, Assassinations, and RGDP60. Include the appropriate units for all entries.
Put the data in excel and remove the rows corresponding to Malta.

The summary statistics can be found using the formulas has shown below.

b. Run a regression of Growth on Trade Share, YearsSchool, Rev_Coups, Assassinations, and RGDP60. What is the value of the coefficient on Rev_Coups? Interpret the value of
Step 1 : Put the data in excel as shown. Remove the oil column.

Step 2 : Go to data, click on data analysis and select regression

Step 3: Update the values as shown

Step 4 : Output will generated as follows.

Coefficient of Rev_coups = -2.1504
1 unit increase in Rev_coups decerase the growth by 2.1504 units.

c. Use the regression to predict the average annual growth rate for a country that has d. Repeat (c) but now assume that the country's value for Trade Share is one standard
(Value of d not given)

e. Why is Oil omitted from the regression? What would happen if it were included? this coefficient.
The value of Oil is zero. There is no variation in the data, hence not provide any meaningful insight in predicting the growth and the regression coefficient would be zero.