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AS2 (1)

This document outlines the guidelines for Individual Assignment 1 for the Introduction to Econometrics course for Semester 2 of 2024-25. It includes submission details, penalties for late submissions, and specific instructions for completing the assignment, including the format and content required for each question. The assignment consists of four questions related to econometric models and interpretations, totaling 50 marks and accounting for 15% of the course assessment.

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lian74274
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2 views3 pages

AS2 (1)

This document outlines the guidelines for Individual Assignment 1 for the Introduction to Econometrics course for Semester 2 of 2024-25. It includes submission details, penalties for late submissions, and specific instructions for completing the assignment, including the format and content required for each question. The assignment consists of four questions related to econometric models and interpretations, totaling 50 marks and accounting for 15% of the course assessment.

Uploaded by

lian74274
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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2024/25 Semester 2

Introduction for Econometrics

Individual Assignment 1
2024-25 S2

**************************************************************************
*********
(1) Please submit the assignment via sub-class soul page.
(2) The deadline for the assignment is April 25 (Friday), 6pm. Late submission is subject
to penalties as shown below.

Late Marks deducted

Within 24 hours 20%

24 - 48 hours 50%

More than 48 hours 100%

(3) Students who are found copying homework or lending work to others for copying will
receive NO mark.
(4) Please clearly put down your class number, name and student ID on the front page of
the assignment.
(5) Answers to Questions 1 - 4 except the regression table generated by Stata must be
handwritten in blue/black ballpoint pen on plain white A4 size paper. [Note: Any
failure to comply with the requirements here will result in mark penalty.]
(6) Please make sure enough space is left between each sub-part of the question and each
question to facilitate marking.
(7) Round your final answers to 4 significant figures.
(8) This assignment (50 marks in total) accounts for 15% of the course assessment.
**************************************************************************

Econometrics 1
2024/25 Semester 2

1. Tina wants to study the effect of gender and race on the wage rate of college teachers.
She estimated the effect by using the following regression model:

𝑌𝑖 = 1000 − 100𝐷1𝑖 + 150𝐷2𝑖 − 50(𝐷1𝑖 𝐷2𝑖 ) + 200𝑋𝑖 + 𝑢𝑖

where Y = the annual salary of a college teacher, X = years of teaching experience,


𝐷1 = 1 if male and 0 if otherwise, and 𝐷2 = 1 if Chinese and 0 if otherwise.

(10 points)
a. Interpret the meaning of the coefficient of 𝐷1𝑖 , 𝐷2𝑖 and 𝐷1𝑖 𝐷2𝑖 .

b. What is the expected annual salary of a female non-Chinese college teacher with 10 years
teaching experience?

2. Peter wants to study the causes of drug addiction. He constructed a survey with 1000 drug
users and obtained the following regression result using logit model.
Explanatory Variable Coefficient (t value in parentheses)
Constant 50 (2.5)
Unemployed 0.4 (3.8)
Single -0.4 (0.2)
Lonely 2 (3.6)
Friends with Drug Addiction 1.3 (4.6)

Where Drug Addict = 1 if take drugs every day and 0 otherwise, Unemployed = 1 if
unemployed and 0 otherwise, Single = 1 if single and 0 otherwise, Lonely = 1 if feel lonely
and 0 otherwise, Friends with drug addiction is the number of friends with drug addiction.

(10 points)
a. How should we interpret the coefficient of Lonely and Friends with Drug Addiction?

b. What is the probability of being a drug addict for a person that is single, employed, feel
lonely and has 2 drug addictive friends?

Econometrics 2
2024/25 Semester 2

3. Consider the following model:

𝑌𝑖 = 𝐵1 + 𝐵2 𝑋𝑖 + 𝐵3 𝐷1𝑖 + 𝐵4 (𝐷1𝑖 𝑋𝑖 ) + 𝑢𝑖

where Y = annual earnings of MBA graduates, X = years of service, 𝐷1 = 1 if HKU


MBA and 0 if otherwise.

(10 points)
a. How would you interpret 𝐵2, 𝐵3 and 𝐵4?

b. What can you conclude if 𝐵4 > 0?

4. Suppose you want to study the effect of gender and education on wage rate. Instead of the
linear model that we discuss in class, you believe that gender and education have a non-
linear relationship with wage rate.

(20 points)
Construct a log-lin model with gender, education and the interaction term of gender and
education as the independent variables using table 6.5. You should write down the
population regression function, state the base category, present the Stata regression table
and discuss the interpretation of each estimated coefficients and whether it is statistically
significant.

Econometrics 3

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