Question

The data in Table 2 show the per capita income (PCI) to the nearest $100 and the percentage of the economy in agriculture (PIA) in fifteen countries in South America (1999). The estimated results of a regression model fitted with these data and the error terms are presented below.

                   ^

                 PCI     =   59.13 – 2.60 PIA ………………………………………………………………………..(3)

                 S(b)          8.67      0.71

             

                 R squared = 0.51      n = 15                                               

Country   1        2        3        4        5        6        7        8        9       10       11      12       13        14        15

Error (e) 32.47   -7.53 8.27 8.67   0.27 -11.53 -14.93 -14.13 -4.33 -2.13 12.47 -7.33   -14.33   23.27 -9.13

                                                              Table 2

Country    1        2        3        4        5        6        7        8        9    10        11        12      13     14     15

Y               76     10     44       47      23      19     13       19       8    44         4         31      24     59     37

X                 6     16       9         8       14      11     12       10      18     5        26          8        8       9       5      

(a)Would it be more or less reasonable to specify the model as PIA = f(PCI)? Explain.

(b)For this model, what is your expectation concerning the impact of the explanatory variable on the dependent variable?

(c) What type of data are these?

(d)Is the result of the estimated coefficient consistent with your expectation?

(e) Test for heteroskedasticity at the 5% level of significance. Use the Glejser method.

Answer 1

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