The purpose of this assignment is to provide you with an opportunity to do several things: • Search for and retrieve economic data
• Use economic theory to construct an hypothesis
• Specify an econometric model to test your hypothesis
• Test regression model for CLR violations
1. Use the attached table to identify the data set you have been assigned
2. Use economic theory to form an hypothesis regarding the relationship between
two variables found in your dataset
3. Specify and estimate a regression that will allows you to test your hypothesis
using observations from your dataset. Explain choice of dependent and RHS
variables. Define all variables.
4. Carry out diagnostic tests on your estimated equation based on potential CLR
5. Test your hypothesis
6. Report results of estimation and tests. Results should include estimated
regression, any diagnostics tests, hypothesis tests and descriptive statistics of regression variables.