ECN 3972, section 001

Statistics Applied to Economics II

Dr. Dao

In this modeling problem you are asked to evaluate the model hypothesized above and to present any model of the factors that influence the size of government which may be better. Let us turn to each of these tasks.

Evaluation of the Hypothesized Model

In order to evaluate the hypothesized model you are given a random sample of ratios of government services to GDP and the price of government services, gross domestic product, and population size associated with each ratio for 35 countries.

You will receive a table listing these data in class. GDP is measured in millions of dollars, while population in thousands of people. Each line on this list is to be typed into an EXCEL file in the following format:

1. Use your mouse to click on the START button in the lower left-hand corner of the screen. This will bring up the main menu.
2. Using the mouse or arrow keys, move the cursor to Programs.
3. Once you select Programs, you will be given another list. Move the cursor to Office 97. Another submenu appears. Identify EXCEL by clicking the left mouse button.
4. Double-click on Sheet 1 tab. Type Data. Hit Enter key.
5. If necessary, click cell A1 to make it the active cell. Type Country. Hit Enter key. Active cell is now A2. Start typing in the names of all 35 countries in the sample.
6. Click cell B1 to make it active. Type Gvt Size. Hit Enter key. Active cell is now B2. Enter the data for Gvt Size for all 35 countries, remembering to hit the Enter key after each entry.
7. Click C1 to make it the active cell. Type Price. Hit Enter key. Active cell becomes C2. Enter all data for Price for all 35 countries, using the same procedure as in Steps 5 and 6 above.
8. Click D1 to make it the active cell. Type Population. Hit Enter key. Active cell becomes D2. Enter all data for Population for all 35 countries.
9. Click E1 to make it the active cell. Type GDP. Hit Enter key. Active cell becomes E2. Enter all data for GDP for all 35 countries.

 

 

10. Click A1 to make it active. Click the Center button (two buttons to the right of the U (Underline button)). Click the B (Bold) button. Click the Format Painter button (above the I button and looks like a paintbrush). Position the cursor in cell B1 (which looks now like a paintbrush), click and drag across through cell E1. Release the mouse button. All headings are now bold and centered.
11. Click File in the menu bar. Move the cursor to Print and click. The Print dialog box appears. Click OK. You should get a printout of your data sheet. Check to make sure all data are entered correctly.
12. Click cell F1 to make it active. Type Per capita GDP. Hit Enter key. Click cell E1 to make it active. Click the Format Painter button. Position the cursor in cell F1 and click. Per capita GDP should now be bold and centered (You may not see it centered, but that is because the column width has not yet been adjusted). Click on Column Selector A and drag across through column F to highlight entire range. Release the mouse button. Move the cursor to the right edge of column selector F until it changes to a big + sign. Double-click to automatically adjust the width of all columns to the left of F according to the contents in each column.
13. Click F2 to make it the active cell. Type =(E2/D2)*1000 and hit Enter key. The result of the division of the value in cell E2 by that in cell E2 is displayed in cell F2. Click F2 to make it the active cell. Click the Decrease Decimal button (9^th button to the right of the U button) six times until the result in cell F2 is a whole number.
14. Click the Copy button (two buttons to the left of the Format Painter button). A marquee appears in cell F2. Click in cell F3 and drag mouse down to cell F36. Hit Enter key. The results for per capita GDP are now displayed for all remaining countries.
15. Click on cell E1 to make it active. Drag mouse down to E36 to highlight the entire range. Do not worry if cell E1 is not highlighted. Click the Cut button (looks like a pair of scissors next to the Copy button). Position pointer in cell G1 and hit Enter key. Contents of cells E1 through E36 are now in cells G1 through G36.
16. Position pointer in column selector for column E. While holding the Ctrl (Control) key down, hit the – (hyphen) key. The entire E column disappears and the values for per capita GDP now are to the left of those for GDP. (You need to do this for the next step to work).
17. Click Tools on the menu bar. Move cursor to Data Analysis and click. The Data Analysis dialog box appears. Click on the down arrow until you can find regression on the list. Click it to select this option. Click OK.
18. In the Regression dialog box, do the following:

1. Enter B1:B36 in the Input Y Range edit box.
2. Click in the Input X Range edit box and enter C1:E36. Note that only a single, contiguous range is allowed in this edit box.
3. Select the Labels check box.
4. Select the New Worksheet Ply option button and enter Partial Output as the sheet name.
5. Select the Residuals, Standardized Residuals, and Residual Plots check boxes. Click the OK button to obtain the output.

1. Click Format on the menu bar. Move pointer to Column then select AutoFit Selection.
2. Click the Data sheet tab to make that sheet the active one. Select Tools, then Data Analysis and then select Correlation from the Analysis Tools list box and click OK. Enter B1: E36 in the Input Range edit box, select the Labels in First Row check box, and select the New Worksheet Ply option button and enter Corr. Matrix as the new sheet name.
3. Click the OK button. The resulting correlation matrix is displayed. Click on Column Selector A and drag across through column E to highlight entire range. Release the mouse button. Move the cursor to the right edge of column selector E until it changes to a big + sign. Double-click to automatically adjust the width of all columns to the left of E according to the contents in each column.
4. Click File in the menu bar. Move the cursor to Print and click. The Print dialog box appears. Click OK. You should get a printout of your Corr. Matrix sheet.
5. Click the Partial Output sheet tab to make it active. Click File in the menu bar. Move the cursor to Print and click. The Print dialog box appears. Click OK. You should get a printout of your Partial Output sheet.
6. Click File in the menu bar. Move the cursor to Print and click Save As. In the Save As dialog box, do the following:

1. Click on the Arrow in the Save As list box, select Drive A: (make sure you have a formatted diskette in the A drive), then in the File Name list box, type ECN3972_MP1.
2. Click the Save button to complete the process.

Make sure that you will always bring the last two printouts to class.