Problem 2
With a sample of 30 families we estimate the following model:
T R
i i i = b + b + e 0 1
where:
Ti: the natural logarithm of the taxes paid by family i.
Ri: the natural logarithm of the income of family i.
We have the following data:
n = 30 R
i
i
Σ = 500 R
i
i
2 Σ = 10000
T
i
i
Σ = 350 T
i
i
2 Σ = 6000 T R
i i
i
Σ = 7500
a) Calculate and interpret the R-squared of the model.
b) Estimate the variance and covariance of the estimated parameters.
With a sample of 30 families we estimate the following model:
T R
i i i = b + b + e 0 1
where:
Ti: the natural logarithm of the taxes paid by family i.
Ri: the natural logarithm of the income of family i.
We have the following data:
n = 30 R
i
i
Σ = 500 R
i
i
2 Σ = 10000
T
i
i
Σ = 350 T
i
i
2 Σ = 6000 T R
i i
i
Σ = 7500
a) Calculate and interpret the R-squared of the model.
b) Estimate the variance and covariance of the estimated parameters.
