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Empirical Exercise (Due Nov.

20th by 11:59PM)
Consider the data in the file Growth.csv which contains data on average growth rates over 1960-
1995 for 65 countries, along with variables that are potentially related to growth. A complete
description of the data is given in data description which is under the name Growth- Data
Description and can be found on Blackboard.
Using this data, carry out the following empirical exercises:
1. Construct a table that shows the sample mean, std. deviation, minimum and maximum
values for the variables Growth, Trade-Share, YearsSchool, Oil, Rev_Coups,
Assasinations, and RGDP60.

2. Run a regression of Growth on TradeShare, YearsSchool,Rec_Coups, Assasinations and


RGDP60. Show the output of this regression in R (take a screenshot and crop the output
summary in your word file that contains your answers).

3. What is the value on the coefficient on Rev_Coups? Is it statistically significant? Do


interpretation on this coefficient.
The coefficient for Rev_Coups is estimated to be approximately -2.1575 and a p-value of
.0567. Therefore, the test is not significant is alpha is greater than .0567. We may also
say that revolution has a negative relationship with a countries growth which stands to
common reasoning.
4. What is the value of the adjusted R-square? Do these variables explain the majority of
country growth?
The adjusted R-Square Value is .3045 which indicate that the variables are not good
indicators of a country’s growth.
5. Use the regression to predict the average annual growth for a country that has average
values for all regressors.
The predicted annual growth rate assuming average values for all regressor is

approximately 1.94% (Taken from chart).

6. Repeat (3) but now assume that the country’s value for TradeShare is one std. deviation
above its mean.
The coefficient of tradeshare is approximately .5647 and is statistically significant.

Notes: Please submit through email an individual word file with your answers WELL
ORGANIZED along with your R code (.R file) at the end.

R-Script:
# Clear
rm(list=ls())

#import data
gdata<-read.csv("Growth.csv")

#summarize date
str(gdata)
summary(gdata)

# Create Table
desc <- function(x){
m <- mean(x)
std <- sd(x)
mi <- min(x)
ma <- max(x)
out <- c(m,std,mi,ma)
return(out)
}
table <- apply(gdata[,-1],2,desc)
rownames(table) <- c("Mean","Standard Deviation" ,"Minimum","Maximum")
t(table)

#Regression
modell <- lm(growth~., data=gdata[,-c(1,3)])
summary(modell)