ECON 382

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Econ 382

Lecture Notes



Writing Assignment (Paper) Instructions

Goal:   To perform an empirical econometric study.
Reward: 10% of your course grade.

Data Source: 
T. Mamuneas, A. Savvides and T. Stengos, "Economic Development and the Return to Human Capital: A Smooth Coefficient Semiparametric Approach", Journal of Applied Econometrics, Vol. 21, No. 1, 2006, pp. 111-132.  

 Annual data for 51 countries for 1985; one row of the data corresponds to one year for one country.

Variable Names and Descriptions


Description (Details  in Appendix A of the paper (PDF) )


 Country ID




 Physical capital stock




 Human capital stock




 Output share of labor


 Share of human capital in adjusted output share of labor


 Purchasing Power Parity relative to the US.


 Nominal exchange rate (units of domestic currency per one US dollar)


 Index of political freedom (1 - 6), where 1= Most freedom, 6 =Least freedom,
 the rest is in-between.


 Index of civil freedom (1 -7), where 1= Most freedom, 7 =Least freedom,
 the rest is in-between.


 Dummy variable:  1= country's trade regime is classified as open and  
 0= country's trade regime is classified as closed


 Dummy variable equals 1 if country is high income, 0 if not.


 Dummy variable equals 1 if country is middle income, 0 if not.


 Dummy variable equals 1 if country is in Latin America, 0 if not.


 Dummy variable equals 1 if country is in Sub Saharan Africa, 0 if not.


 Dummy variable equals 1 if country is in South East Asia, 0 if not.

Data: STATA Data file, or Excel  
  1. The paper should be between 5 and 9 pages plus cover page. The cover page should contain appropriate
       title for the paper and the name of the author. The relevant STATA output should be included in the text.
  2. The paper should be submitted in electronic form (MS Word) via Blackboard.
       The paper can be submitted ONLY via Blackboard.
       As usual you can work together and consult with other students but you must write your own paper.
       I will use the BB Safe Assignment to check for plagiarism.
   3. Check Section 4.6 of the Wooldridge book for the reporting of the regression results.
 Due Date: The paper is due by noon the last day of classes.
                    No extension of the deadline.               
What to include in the paper:
   1. Define your main research question(s) by using your knowledge from economic theory classes.
   2. Clearly define your dependent/outcome variable and 3 to 5 independent variables. One of the independent
       variables must be dummy/indicator variable.
   3. Formulate a hypothesis about the relationship between the dependent variable and the independent variables.
   4. Describe the data, plot the data, use descriptive statistics for this analysis.
   5. Perform simple bivariate analysis, e.g. correlation matrix, scatterplot, discuss functional form, etc.
   6. Build a multiple regression model and estimate its coefficients. Answer the questions about the statistical
       significance of the whole model, each of the slope coefficients, and how good the model is, e.g. the proportion
       of explained variance.
   7. Interpret the regression coefficients.
   8. Conduct the necessary hypothesis tests. Include at least one hypothesis test for general linear restrictions of two
        or more (but not all) slope coefficients.
   9. Conclude and discuss the implications of your findings.
Good Luck!

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