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Answers Assignment Set 1 - Updated 0411

This document provides solutions to an assignment on principles of econometrics. It includes summaries of key values and statistics from probability distributions and empirical data on educational achievement and employment status. Information presented includes means, variances, correlations, and differences between groups with 95% confidence intervals.

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Niilo Pitko
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45 views

Answers Assignment Set 1 - Updated 0411

This document provides solutions to an assignment on principles of econometrics. It includes summaries of key values and statistics from probability distributions and empirical data on educational achievement and employment status. Information presented includes means, variances, correlations, and differences between groups with 95% confidence intervals.

Uploaded by

Niilo Pitko
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Principles of Econometrics (721066S), Assignment set 1, Solutions

(5.11.2020)
1.
a) E(Y)= 0.88
b) 0.12
c) The conditional expectations are: 0.831 and 0.896
d) 0.169 and 0.104
e) 0.35 and 0.65
f) Educational achievement and employment status to be independent they need to satisfy, for all
values of x and y,
Pr(𝑋 = 𝑥|𝑌 = 𝑦) = Pr(𝑋 = 𝑥)

2.
Value of Y Probability
distribution
2 4 6 8 10 of X
3 0.04 0.09 0.03 0.12 0.01 0.29
Value of X 6 0.10 0.06 0.15 0.03 0.02 0.36
9 0.13 0.11 0.04 0.06 0.01 0.35
Probability
0.27 0.26 0.22 0.21 0.04 1.00
distribution of Y

a) The probability distribution is given in the table above.

mean: 𝐸(𝑌) = 4.98


variance: 𝑣𝑎𝑟(𝑌) = 5.8

b) The conditional probability of Y|X=6 is given in the table below

Value of Y
2 4 6 8 10
0.10/0.36 0.06/0.36 0.15/0.36 0.03/0.36 0.02/0.36

𝐸(𝑌|𝑋 = 6) = 4.944
𝑣𝑎𝑟(𝑌|𝑋 = 6) = 5.244

c) 𝑐𝑜𝑣(𝑋, 𝑌) = −1.3764

Correlation: 𝑐𝑜𝑟𝑟(𝑋, 𝑌) = −0.1949 NB the correct answer is -0.239


3.
a) 0.9382
b) 0.9962
c) 0.1606

4.
a) 𝜇 = 0.065; 𝜎 = 0.044
b) 𝜇 = 0.0725; 𝜎 = 0.056
c) 𝑤 = 1, 𝜎 = 0.07
d) 𝑤 = 0.18, 𝜎𝑅 = 0.038.

Empirical exercise:
a)
YR01 Mean Std. Dev. Obs.
0 11.63216 5.607188 7612
1 19.79261 10.67980 7440
All 15.66576 9.429721 15052

b) Change: 8.16, 95% CI: {7.89; 8.43}

c)
0 19.03595 9.176125 7612
1 19.79261 10.67980 7440
All 19.40996 9.954681 15052

Change: 0.76, 95% CI: {0.44; 1.08}

e)
0 15.68666 8.217372 3485
1 23.41062 11.27548 3955
All 19.79261 10.67980 7440

f) Difference: 7.28, NB! the correct difference is 7.72, 95% CI: {7.28; 8.16}
g)
BACHELOR Mean Std. Dev. Obs.
0 16.34804 7.531796 4650
1 23.25566 9.909940 2962
All 19.03595 9.176125 7612

Difference: 6.92, 95% CI: {6.50; 7.34}

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