A researcher wants to estimate the price elasticity of demand for cars in the states of Washington, Oklahoma, Arkansas,

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A Researcher Wants To Estimate The Price Elasticity Of Demand For Cars In The States Of Washington Oklahoma Arkansas 1 (110.59 KiB) Viewed 33 times

A researcher wants to estimate the price elasticity of demand for cars in the states of Washington, Oklahoma, Arkansas, Louisiana, and New York for the year 2017. For this, she uses the sample of car owners, measured state-wise by the number of car registrations at the end of 2017 To remove simultaneity between the per capita quantity demanded of cars (Qars) and the price of cars (pars)she uses two instruments, namely state sales tax on cars (Stax, measured by the sales tax levied on cars in that state) and local sales tax on cars (Ltax, measured by the statewise average of the local sales tax levied on cars). She also uses statewise income level of the car owners (Inc, measured by the average household income of car owners in that state) as an exogenous regressor She wants to test whether the instruments are exogenous or not, for which she uses the overidentifying restrictions test. The regression of the estimated two stage least squares residual ( ), on the instruments and the exogenous variable included is. TSLS TSLS u = 1.81 + 1 99Stax, +1.41Ltax +264/ng (0.62) (1.23) (1.16) (087) ho Standard errors are given in parentheses. The researcher wants to test the hypothesis that the effect of Sfax, onu TSLS is not significant The test statistic associated with the test the researcher wants to conduct is TSLS The researcher also wants to test the hypothesis that the effect of Lax, onu is not significant The test statistic associated with this test is (Round your answers to two decimal places.) Suppose the estimated correlation between the two test statistics calculated by the researcher Otx12) is 0.56. The researcher wants to test the hypothesis that Stax, and Ltax, are not jointly significant The test statistic associated with the test the researcher wants to conduct is (Round your answer to two decimal places) The researcher wants to test the hypothesis that all the instruments are exogenous The test statistic associated with the test the researcher wants to conduct is (Round your answer to two decimal places) At the 5% significance level, the researcher the hypothesis that all instruments are exogenous At the 5% significance level, the crtical value of the chi-squared distribution with one degree of freedom is 3.84