dummy variables in panel data for certain countries

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freerider
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Joined: Sat Apr 11, 2009 9:29 am

dummy variables in panel data for certain countries

Postby freerider » Sat Apr 11, 2009 9:47 am

hi...my problem standing below pls help....i just wonder what i need to solve...can someone immediately help thnx
datafile download: http://rapidshare.com/files/220134939/data_2.xls.html


In the file Data#2 we have data from January 1991 to December 1996 on house prices, square footage, and other characteristics of 4682 houses that were sold in Stockton, CA. Professor John Knight, University of the Pacific, provided these data. One of the key problems regarding housing prices in a region concerns construction of “house price indexes”. After controlling for features of a house, what change in selling price is due to changes in the overall price level? The overall price level is affected by demand in the local economy, such as population change, interest rates, unemployment rate, and income growth. If we were constructing a “consumer price index” for living in an area, the house price index is one element we would incorporate. Understanding the price index is important for tax assessor, who must reassess the market value of homes in order to compute their annual property tax. It is also important to mortgage bankers and other home lenders, who must reevaluate the value of their portfolio of loans with changing local conditions. It is also important information for homeowners trying to sell their houses as well as potential buyers, as they attempt to agree upon a selling price.

a) Estimate a regression model for house price, including as explanatory variables the size of the house (SQFT), the age of the house (AGE) and annual dummy variables, omitting the dummy variable for the year 1991.

price =b1 +b2sqft+b3age+a2d92+a3d94+a4d95+a5+96

b) Discuss the estimated coefficients on SQFT and AGE, including their interpretation, signs, and statistical significance.
c) Discuss the estimated coefficients on the dummy variables.
d) What would have happened if we had included a dummy variable for 1991?

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