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

Exercise 9

Use the housing price data in HPRICE1.RAW for this exercise.

(i) Estimate the model log(price) + ????0 + ????1log(lotsize) + ????2log(sqrft) + ????3bdrms = u and report the results in the usual OLS format. 220 Part 1 Regression Analysis with Cross-Sectional Data

(ii) Find the predicted value of log(price), when lotsize = 20,000, sqrft = 2,500, and bdrms = 4. Using the methods in Section 6.4, find the predicted value of price at the same values of the explanatory variables.

(iii) For explaining variation in price, decide whether you prefer the model from part (i) or the model

price = ????0 + ????1lotsize + ????2sqrft + ????3bdrms + u.

Step 1 of 6

(i)

The given data has a total of 88 observations. The relevant columns are as follows:

The model required to be estimated is: