(b) 18 marks

Assume that

E(lbwght white,male, cigs, lfaminc)

= Bo + B₁white + B₂male + ß3cigs + ß4lfaminc

The associated linear regression equation in error form is given by

Ibwght = Bo + B₁white + B₂male + Bacigs + ß4lfaminc + u.

i) Estimate (3) by OLS. Report the estimated regression equation in equation form in the

main body of your assignment. Report the estimated coefficients and standard errors to

three decimal places. Place the Eviews output in Appendix (b).

ii) Based on the output obtained when (3) is estimated by OLS, are the regressors in (3) jointly

significant? Briefly explain.

iii) Based on the reported p-values, are any of the regressors in (3) individually insignificant at

the 10% significance level? Briefly explain.

iv) Based on the reported p-values, are any of the regressors in (3) individually insignificant at

the 5% significance level? Briefly explain.

v) Do the estimated coefficients have the expected sign? Briefly explain in two sentences for

each estimated coefficient.

vi) Evaluate the explanatory power of your model.

vii) Interpret 34.

viii) Based on the estimated regression equation, what is the most significant influence on the

predicted birth weight of a new born infant? Briefly explain.

(2)

3

(2 marks)

(2 marks)

(2 marks)

(2 marks)

(4 marks)

(2 marks)

(2 marks)

(2 marks)