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Add the variable log( prgnp) to the minimum wage equation in $(10.38) .$ Is this variable significant? Interpret the coefficient. How does adding log(prgnp) affect the estimated minimum wage effect?

No. Coefficient is interpreted as elasticity. Increase minimum wage effect.

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Chapter 10

Basic Regression Analysis with Time Series Data

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This is the estimated equation. So the new variable that you just act to this equation pr Jimmy and PT This one is highly significant. We know it is significant because we can calculate the tea statistic value of this variable. This statistic is calculated by taking the estimated coefficient 0.28 five divided by its standard Errol 0.8 and you will get roughly 3.6. This is a high T statistic value, all right, we need to integrate the estimated coefficient of the new variable and when we have dependent. Variable and independent variable both in log than the estimated coefficient should be interpreted as elastic city of the dependent variable with respect to the independent variable. So the bait ahead of lock P r G n p is elastic city of three p o p. The dependent variable with respect to PR GNP. Yeah, elastic City means if p r G N P increased by increases by 1% that would lead to an increase of 10.258 percent in pre p o. P. All else equal the last part of the problem. We want to see if including the new variable change the size of the minimum wage effect and the size of the minimum wage effect is the coefficient of variable mean C O V actually lock of men's C O. V. So compared to you, the equation before adding the new variable this value the beta had Yeah, okay. It has increased from minus point on 69 previously to minus point 212 As of now, Mhm, I should say it increased in absolute value. The magnitude has increased ID. Yeah, In other words, the elasticity of pre p o. P. With respect to this this variable I mean C O V has increased okay after we include lock of p r g N P.

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