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Econ2206- Assignment 1

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Assignment 1 To investigate the effects of the land size (lotsize)and house size (sqrft) on the house price (price) in a particular suburb, the following model log()=0+1log()+2log()+ is used. a) What is the meaning of 1in this model? b) Explain why you would (or would not) expect that 1>0. c) Explain the meaning of the zero-conditional-mean assumption for this model. d) Download the description file “hprice1.des” and data file “hprice1.raw” from the course website and read the descriptions about the data. Find the (i) the units of measurement; (ii) the sample means; and (iii) the sample standard deviations of price , lotsize , sqrft and bdrms. (e) With the data in “hprice1.raw”, estimate the above …show more content…

(/m# option or -set memory-) 10.00 MB allocated to data . do "D:\DOCUME~1\z3287970\LOCALS~1\Temp\STD00000000.tmp" . #delimit; //Commands must be separated by semicolon delimiter now ; . version 9; . clear; . capture log close; . set memory 64m; (65536k) . cd D:\stata; D:\stata . log using myLog, replace; (note: file D:\stata\myLog.smcl not found) -------------------------------------------------------------------------------- name: log: D:\stata\myLog.smcl log type: smcl opened on: 22 Mar 2011, 14:36:56 . infile > price assess bdrms lotsize sqrft > colonial lprice lassess llotsize lsqrft > using hprice1.raw; (88 observations read) . //Sample Means and Sample Standard Deviations// > summarize price lotsize sqrft bdrms; Variable | Obs Mean Std. Dev. Min Max -------------+-------------------------------------------------------- price | 88 293.546 102.7134 111 725 lotsize | 88 9019.864 10174.15 1000 92681 sqrft | 88 2013.693 577.1916 1171 3880 bdrms | 88 3.568182 .8413926 2 7 . //Estimate the OLS model// > regress lprice llotsize

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