Exercises

Questions

Comment on these results, bearing in mind that all values of income above 16 (thousand dollars) correspond to Y = 1 and all values of income below 16 correspond to Y = 0. A priori, what would you expect in such a situation?

I = -493.54 + 32.96 income t = (—0.000008)(0.000008)

45G. S. Maddala, Introduction to Econometrics, 2d ed., Macmillan, New York, 1992, p. 342.

626 PART THREE: TOPICS IN ECONOMETRICS

15.3. In studying the purchase of durable goods Y (Y = 1 if purchased, Y = 0 if no purchase) as a function of several variables for a total of 762 households, Janet A. Fisher*obtained the following LPM results:

Explanatory variable Coefficient Standard error

Constant

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