Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

ECON4309/ECON6309/ECON7309 Economic Measurement

Problem Set 2

2023

Problem 1 (1 mark)

The data set on personal computers from Chapter 7 of the CPI Manual (2004) (Appendix 7.1) has been loaded onto the assignment section of the course web site, in the file PC- DataRevised.xlsx. This data set actually fixes a few problems with the printed data set.

Use the data to try to replicate the results in Table 7.4 of the CPI Manual. You should try both the linear and log-linear models.  Hint:  I don’t think you can replicate the results exactly! Anyhow, just write up your results, explaining coefficients of interest (interpretation, statistical significance, and so forth).

Problem 2 (2 marks)

The file PCDataRevised.xls includes an extra column of data compared to the published data set. This column contains some quantity data. Use this information to estimate both hedonic regression models using weighted least squares, trying both quantity and expenditure share weights. Discuss the results and the relative merits of both sets of weights, from the theoretical and empirical perspectives.

Problem 3 (2 marks)

The data set includes an “interaction” variable, DELL*SPEED, which takes the value of “speed” when the PC is a DELL and zero otherwise.  As noted in the CPI Manual (p. 117), it is possible to consider other interaction terms.   Propose and justify some other  interaction terms. Briefly report on the models tried and provide a detailed description and  interpretation of your preferred model.