Your textbook estimates the initial relationship between the percentage change of real frozen OJ and the freezing degree days as follows: $ \widehat { \%ChgP}\text {t }=-0.40+0.47 F D D_{\mathrm{t}}$
$(0.22)\quad(0.13)$
$t=1950: 1-2000: 12, R^{2}=0.09, S E R=4.8$
a. Calculate the t-statistic for the slope coefficient. Can you reject the null hypothesis that the coefficient is zero in the population?
b. The above regression was estimated using HAC standard errors. When you re-estimate the regression using homoskedasticity-only standard errors, the standard error of the slope coefficient drops to 0.06. Calculate the t-statistic for the slope coefficient again. Which of the two standard errors should you use for statistical inference?

Question

Quizplus · Accepted Answer

The Answer of Your textbook estimates the initial relationship between the percentage change of real frozen OJ and the freezing degree days as follows: $ \widehat { \%ChgP}\text {t }=-0.40+0.47 F D D_{\mathrm{t}}$
$(0.22)\quad(0.13)$
$t=1950: 1-2000: 12, R^{2}=0.09, S E R=4.8$
a. Calculate the t-statistic for the slope coefficient. Can you reject the null hypothesis that the coefficient is zero in the population?
b. The above regression was estimated using HAC standard errors. When you re-estimate the regression using homoskedasticity-only standard errors, the standard error of the slope coefficient drops to 0.06. Calculate the t-statistic for the slope coefficient again. Which of the two standard errors should you use for statistical inference?

Your Textbook Estimates the Initial Relationship Between the Percentage Change %ChgP^t =−0.40+0.47FDDt \widehat { \%ChgP}\text {t }=-0.40+0.47 F D D_{\mathrm{t}}%ChgP​t =−0.40+0.47FDDt​

Your Textbook Estimates the Initial Relationship Between the Percentage Change $\widehat { \%ChgP}\text {t }=-0.40+0.47 F D D_{\mathrm{t}}$