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Econometrics (NA3011)

Econometrics (NA3011). Reza Mortazavi 2014 Stata Lecture 2. Explaining house prices. use http ://users.du.se/~ rem/housing.dta browse generate lnprice =ln(price ) generate lnlotsize =ln( lotsize ) regress lnprice lnlotsize bedrooms bathrms airco Interpret.

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Econometrics (NA3011)

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  1. Econometrics (NA3011) Reza Mortazavi 2014 Stata Lecture 2

  2. Explaining house prices • use http://users.du.se/~rem/housing.dta • browse • generate lnprice=ln(price) • generate lnlotsize=ln(lotsize) • regress lnpricelnlotsize bedrooms bathrmsairco • Interpret

  3. Misspecification: Ramsey RESET test • estatovtest • The test does not reject the current specification. However we may want to examine other explanatory variables:

  4. regress lnpricelnlotsize bedrooms bathrmsairco driveway recroomfullbasegashwgarageplprefareastories • Compare to the previous model. What has happened to the ceteris paribus effect of lotsize? • An F-test of the seven additional explanatory variables: • test driveway recroomfullbasegashwgarageplprefareastories • Conclusion

  5. Alternative specification • regress lnpricelnlotsize bedrooms bathrmsairco driveway recroomfullbasegashwgarageplprefarea stories

  6. Explaining individual wages • use http://users.du.se/~rem/bwages.dta • browse • regr wage male educexper • Non-linear effects? • gen expersq=exper^2 • regr wage male educexperexpersq

  7. Explaining individual wages • generate lnexpersq=(lnexper)^2 • regrlnwage male lneduclnexperlnexpersq • Elasticity of wage with respect to experience? • Note above we have a square term! • Collinearity • estatvif • regrlnwage male lneduclnexper

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