9:31 5GUC .lll 84% Bo+B1 24 ẞo 16 βο Treatment Group 57 Bo+B1+ B2+ ẞ3 Counterfactual Bo+ B1+ B2 Comparison Group 37 Bo+ B2 Pre-intervention Post-intervention Model Legibility With the information provided, which Guass-Markov assumption would this most closely resemble, explain. Assumption FO (Firm-pay Orthogonality) E(Eit j(it),t) = = 0 (8) Regression Results Circle all the statistically significant results, and cross out all the insignificant results. Table 1: Impact of Income on Consumption by Assets and Race Dependent Variable: A Log Non Durable Consumption (1) (2) (3) (4) (5) (6) (7) (8) A Log Income 0.075 0.057 0.214 0.163 0.258 (0.004) (0.003) (0.017) (0.011) (0.019) 0.220 (0.013) 0.268 0.252 (0.020) (0.015) (A Log Income) x Black 0.048 (0.003) 0.175 (0.031) 0.102 (0.026) 0.010 (0.023) (A Log Income) x Hispanic 0.023 (0.003) 0.127 (0.021) 0.096 0.029 (0.019) (0.017) (A Log Income) x Checking -0.440 -0.101 (0.039) (0.032) (A Log Income) x Liquid (Imputed) -0.176 (0.046) -0.448 (0.036) OLS/IV OLS Black and Hispanic Dummies Asset Rank Control OLS Yes TV TV TV IV TV Yes Yes TV Yes Observations Adjusted R2 25,774,028 0.004 0.004 25,774,028 20,095,173 -0.001 Yes 20,095,473 20,095,473 -0.004 -0.006 Yes Yes Yes 20,095,173 20,095,173 -0.008 -0.008 20,095,473 -0.008 Note: This table shows estimates of the elasticity of consumption with respect to income (9). Columns (1) and (2) show OLS estimates of the effect of income on consumption using equations (1) and (2) respectively. Columns (3)-(8) show IV estimates using equations (7) and (6). Standard errors are clustered at the firm level. Columns (5) and (6) control for a narrow measure of assets: chocking account balance. Asset variables are parameterized as AssetRank/N - 0.5, so the variable is scaled from -0.5 for the lowest asset household to 0.5 for the highest asset household. Columns (7) and (8) control for liquid assets. Liquid assets are imputed using checking account balance and race. The IV specifications control for five lags of the change in coworker pay. See Section 3.7 for details.

Exercise A5 How does the appearance of positive slope differ from negative slope and from zero slope?

What is the problem of moral hazard?

Metropolitan Hospital has estimated its average monthly bed needs as N=1,000+9X where X=timeperiod(months);January2002=0 N=monthlybedneeds Assume that no new hospital additions are expected in the area in the foreseeable future. The following monthly seasonal adjustment factors have been estimated, using data from the past five years: Forecast Metropolitans bed demand for January, April, July, November, and December 2007. If the following actual and forecast values for June bed demands have been recorded, what seasonal adjustment factor would you recommend be used in making future June forecasts?

What are four responses to the claim that people should not behave in the way described in this chapter?

How is it possible to bear a cost without realizing it? What are some examples of policies that affect people in ways of which they may not even be aware?

A firm experienced the demand shown in the following table. *Unkown future value to be forecast Fill in the table by preparing forecasts based on a five-year moving average, a three-year moving average, and exponential smoothing (with a w=0.9 and a w=0.3). Note The exponential smoothing forecasts may be begun by assuming Y t+1=Yt. Using the forecasts from 2005 through 2009, compare the accuracy of each of the forecasting methods based on the RMSE criterion. Which forecast would you have used for 2010? Why?

What is an actuarially fair insurance policy?

What is deflation?

Consider two ways of protecting elephants from poachers in African countries. In one approach, the government sets up enormous national parks that have sufficient habitat for elephants to thrive and forbids all local people to enter the parks or to injure either the elephants or their habitat in any way. In a second approach, the government sets up national parks and designates 10 villages around the edges of the park as official tourist centers that become places where tourists can stay and bases for guided tours inside the national park. Consider the different incentives of local villagers-who often are very poor-in each of these plans. Which plan seems more likely to help the elephant population?