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Assignment -Group 1

The practical assignment for Econometrics involves analyzing house prices based on the number of bedrooms, lot size, and house size using regression analysis. Key statistical results indicate a significant model fit with an R-squared of 0.6724 and significant predictors for lot size and house size, while the number of bedrooms is not statistically significant. The assignment also includes tasks to check model fit, variable significance, multicollinearity, heteroskedasticity, and potential omitted variables.

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18 views

Assignment -Group 1

The practical assignment for Econometrics involves analyzing house prices based on the number of bedrooms, lot size, and house size using regression analysis. Key statistical results indicate a significant model fit with an R-squared of 0.6724 and significant predictors for lot size and house size, while the number of bedrooms is not statistically significant. The assignment also includes tasks to check model fit, variable significance, multicollinearity, heteroskedasticity, and potential omitted variables.

Uploaded by

a32318721
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Practical Assignment for Econometrics

Mark = 50 %( 20% presentation + 30% content of the assignment); Instructor: Eshetu S. (PhD)

Given: House price in 1000Birr =f(number of bed rooms, size of lot in square feet, size of
house in square feet)___________Group 1

Source | SS df MS Number of obs = 88

-------------+---------------------------------- F(3, 84) = 57.46

Model | 617130.701 3 205710.234 Prob > F = 0.0000

Residual | 300723.805 84 3580.0453 R-squared = 0.6724

-------------+---------------------------------- Adj R-squared = 0.6607

Total | 917854.506 87 10550.0518 Root MSE = 59.833

------------------------------------------------------------------------------

price | Coef. Std. Err. t P>|t| [95% Conf. Interval]

-------------+----------------------------------------------------------------

bdrms | 13.85252 9.010145 1.54 0.128 -4.065141 31.77018

lotsize | .0020677 .0006421 3.22 0.002 .0007908 .0033446

sqrft | .1227782 .0132374 9.28 0.000 .0964541 .1491022

_cons | -21.77031 29.47504 -0.74 0.462 -80.38466 36.84405

hettest

Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance

Variables: fitted values of price

chi2(1) = 20.55

Prob > chi2 = 0.0000

vif

Variable | VIF 1/VIF

-------------+----------------------

sqrft | 1.42 0.704893

bdrms | 1.40 0.715992

lotsize | 1.04 0.964124

-------------+----------------------

Mean VIF | 1.28


ovtest

Ramsey RESET test using powers of the fitted values of price

Ho: model has no omitted variables

F(3, 81) = 4.26

Prob > F = 0.0076

Tasks:

1. Checking model fit


2. Checking the significance of individual variables (using t-test)
3. Check Multicollinearity
4. Check Heteroscedasticity
5. Check Omission of important variables
6. 7. Interpret the significant variables after solving problems (heto, multi and omission) if any

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