Introductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge

Exercise 7

Use the data for the year 1990 in INFMRT.RAW for this exercise.

(i) Reestimate equation, but now include a dummy variable for the observation on the District of Columbia (called DC). Interpret the coefficient on DC and com¬ment on its size and significance.

= 33.86 - 4.68 log(pcinc) + 4.15 log(physic)

(20.43) (2.60) (1.51)

_.088 log(popul)

(.287)

n = 51, R2=139,R2=.084.

(ii) Compare the estimates and standard errors from part (i) with those from equation. What do you conclude about including a dummy variable for a single observation?

=23.95-.57 log(pcinc)-2.74 log(physic)

(12.42) (1.64) (1.19)

+.629 log(popul)

(.191)

n = 50, R2= .273,2 =.226s.

Step 1 of 3

(i)

Using the data for the year 1990 and estimating the model with the inclusion of a dummy variable for the observation on the District of Columbia (called), the result is:

The coefficient of is 16.03498

It is interpreted as the infant mortality rate being 16.03498 for the State of District of Columbia