Print out the regression and answer each of the following questions for the regression run.

  1. Evaluate this result with respect to its economic meaning, overall fit, and the signs and significance of the individual coefficients.

  2. What econometric problems does this regression have?

    The theory behind choosing PROPK instead of an income variable needs to be reviewed carefully. Does supply create its own demand without price changes?

  3. Which of the following statements comes closest to your recommendation for further action to be taken in the estimation of this equation?
    1. No specification changes are advisable (go to the next section).
    2. No variable changes are advisable, but I am concerned about heteroskedasticity or serial correlation (go to the next section).
    3. I would like to add LYDUSP to the equation (go to question set 16).
    4. I would like to drop the dummies from the equation (go to question set 20).
    5. I would like to replace PROPK with YDUSP (go to question set 6).