AFE6019-B Econometrics
Supplementary Coursework 1: Individual data analysis report
Submission deadline: 3pm, 30 July 2021 Word limit: Up to 2000 words Weighting: 40%
1. You should provide answers to ALL the questions. Work should make use of appropri- ate statistical software and the academic literature to supplement the course reading materials. 2. Your name and UB number should be on the cover of your report. 3. You are advised to plan your work carefully and back-up your work. Computing problems will NOT be accepted as reasons for non-submission. 4. Word count excludes cover, tables, figures, and appendices where applicable. 5. Tables and figures:
5.1 Tables and figures must be numbered consecutively in order of appearance within the report. 5.2 Tables and figures should be carefully annotated and can be understood without reading the text. Each table and figure should have an appropriate title and note, which is mandatory. Title (note) should be added above (below) each table and figure. Note should begin with “The table reports …” or “The figure shows …”. 5.3 Tables and figures should be cited in the relevant text by using sentences such as “Table 1 reports …” or “Figure 1 shows …”. 5.4 Failing to meet the requirements for tables and figures will be penalized.
Marking criteria: Your report should use your data analysis to illustrate the key theoretical points to the reader. To the maximum extent it should cover all elements of the question and link them effectively. The report will be assessed for:
1. Clarity in presentation and use of data 2. Depth of knowledge 3. Rigour and evaluation
Assessment will be marked against the University of Bradford undergraduate marking scheme which is provided in the module handbook.
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Note: Please work with a cross sectional dataset that is different from your first attempt.
Economic growth and trade openness The topic of this work is openness to trade and economic growth. Your initial variable will be openness to trade which is measured as opennessi = Exporti + Importi GDPi
where Exporti is total export of country i in a given year, measured in current US dollars; Importi is total import of country i in a given year, measured in current US dollars. GDPi is gross domestic product of country i in a given year, measured in current US dollars.
You will also need a measure of economic growth. You will be required to collect data on this. For both openness and growth use the data available at the World Bank – World Devel- opment Indicators (WDI): http://databank.worldbank.org/data/reports.aspx?source=world- development-indicators
You should work with a specific year of your own choice.
Q1. Define economic growth. Discuss how you measure economic growth. Obtain data on economic growth from WDI for your specific year. Produce a histogram of growth rates. Label it and provide a title for it. Discuss the distribution of growth rates. (5 marks)
Q2. Obtain data required to compute openness to trade from WDI. Produce a scatterplot of openness to trade (x-axis) against growth (y-axis). Based on visual inspection, discuss any pattern and outliers in the data that emerge. Identify the outliers and discuss the impact of outliers on the regression.(5 marks)
Q3. Present a table of summary statistics. This table should contain number of observa- tions, average, standard deviation, minimum, and maximum for both variables. (5 marks)
Q4. Compute and present a correlation matrix. Discuss correlation between growth and
2 openness to trade. (5 marks)
Q5. (1) Specify a regression model that explains how growth rates depend on openness to trade. Estimate the model, present results in a table and discuss your results. (10 marks) (2) Based on the regression results, what is the marginal effect of openness to trade on growth rates, and what is the elasticity of growth rates with respect to openness to trade? (10 marks)
Q6. In the model specified in Q5, are there any omitted variables that should also be in- cluded? If yes, please identify additional variable(s) that should also be included in the model in Q5, and briefly discuss the reason why the variable(s) should be included. Specify a new regression model which includes the variable(s) that you identified as omitted variable(s), estimate the new model, present the results in a table, and discuss your results. If no, please discuss your rationale. (15 marks)
Q7. Perform a statistical test to check whether the functional form in the model specified in Q6 is misspecified. Present your test results in a table, and discuss your results. (15 marks)
Q8. (1) Perform a statistical test to check for heteroskedasticity in the model specified in Q6, present your results in a table and discuss your results. (15 marks) (2) Use a robust estimation method to correct for heteroskedasticity. Present your results in a table, and discuss your results. (15 marks)
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