Subject Code : ECOM20001
Assignment Task:

Task:

Questions
1. First, construct two new variables based on mort and latitude:
• high_mortality = 1 if mort is greater than or equal to the median for mortality and high_mortality = 0 otherwise
• close_equator = 1 if latitude is less than or equal to the median for latitude and close_equator = 0 otherwise

Then report summary statistics (mean, standard deviation, median, min, max) for gdp, mort, latitude, high_mortality, and close_equator. Interpret the means in words for gdp and mort to characterise GDP per capita (PPP) and settler mortality for a given country in the sample. Also interpret the sample means of high_mortality, and close_equator and explain why they are nearly 0.5.

2. (2 marks) Compute the 99% confidence intervals for the respective means of gdp and mort.
3. (2 marks) Plot 2 separate densities within the same graph for gdp when high_mortality = 1 and for gdp when high_mortality = 0. Describe whether each of the distributions are (a) skewed, (b) bimodal, and (c) whether one of the conditional densities tends to yield larger values of gdp.

4. (2 marks) Plot 2 separate densities within the same graph for gdp when close_equator = 1 and for gdp when close_equator = 0. Describe whether each of the distributions are (a) skewed, (b) bimodal, and (c) whether one of the conditional densities tends to yield larger values of gdp.

5. (4 marks) Conduct two separate tests of difference of means.

The first test with hypothesis H0 and alternative H1 is:
- H0: mean(gdp if high_mortality =1) = mean(gdp if high_mortality =0)
- H1: mean(gdp if high_mortality =1) != mean(gdp if high_mortality =0)
The second test with hypothesis H0 and alternative H1 is:
- H0: mean(gdp if close_equator =1) = mean(gdp if close_equator =0)
- H1: mean(gdp if close_equator =1) != mean(gdp if close_equator =0)

where the symbol “!=“ means “not equals.” For each test, report the difference means, 95% confidence interval for the difference in means, p-value for the test, and whether the test implies a statistically significant result at the 1% level of significance. Provide a brief interpretation of your findings by computing the  Assignment 1 percent increase in the conditional mean of gdp when going from high_mortality =1 to high_mortality = 0 . Likewise, (separately) compute the percentage increase in the conditional mean of gdp when going fromclose_equator =1 to close_equator = 0.

6. (5 marks) Construct two separate scatter plots.
• The first plot should have mort on the horizontal axis and gdp on the vertical axis. Also report the correlation coefficient, corr(gdp,mort)
• The second plot should have latitude on the horizontal axis and gdp on the vertical axis. Also report the correlation coefficient, corr(gdp, latitude). Do the patterns in the plots align with your findings from questions 3, 4, and 5?

7. (12 marks) Run the following (separate) single linear regressions:
• Regression 1: dependent variable: gdp, independent variable: mort
• Regression 2: dependent variable: gdp, independent variable: latitude

 

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  • Posted on : April 06th, 2019

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