Paper

Paper

ECON 382/721 Project/Paper Assignment (Example )

Goal: To perform an empirical econometric study.

Reward: 20% 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.

Variables

Name	Description (Details in Appendix A of the paper (PDF) )
ID	Country ID
Y	Output
K	Physical capital stock
H	Human capital stock
INV	Investment
SLADJ	Output share of labor
SHAREHK	Share of human capital in adjusted output share of labor
PPP	Purchasing Power Parity relative to the US.
XR	Nominal exchange rate (units of domestic currency per one US dollar)
POLITICAL	Index of political freedom (1 - 6), where 1= Most freedom, 6 =Least freedom, the rest is in-between.
CIVIL	Index of civil freedom (1 -7), where 1= Most freedom, 7 =Least freedom, the rest is in-between.
OPEN	Dummy variable: 1= country's trade regime is classified as open and 0= country's trade regime is classified as closed
HIGH	Dummy variable equals 1 if country is high income, 0 if not.
MIDDLE	Dummy variable equals 1 if country is middle income, 0 if not.
LATIN	Dummy variable equals 1 if country is in Latin America, 0 if not.
SSAFRICA	Dummy variable equals 1 if country is in Sub Saharan Africa, 0 if not.
SEASIA	Dummy variable equals 1 if country is in South East Asia, 0 if not.

DATA:	STATA Data file, or Excel

Format:
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 e-mail.
As usual you can work together and consult with other students but you must write your own paper.
3. Check Section 4.6 of the Wooldridge book for the reporting of the regression results.

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.