In Estimating the Original Relationship Between Money Wage Growth and the Unemployment

question 32

Essay

In estimating the original relationship between money wage growth and the unemployment rate, Phillips used United Kingdom data from 1861 to 1913 to fit a curve of the following functional form
( $\frac { \dot { W } } { W }$ + β₀)= β₁ × $ur \beta _ { 2 }$ × e^u,
where $\frac { \dot { W } } { W }$ is the percentage change in money wages and ur is the unemployment rate. Sketch the function. What role does β₀ play? Can you find a linear transformation that allows you to estimate the above function using OLS? If, after taking logarithms on both sides of the equation, you tried to estimate β₁ and β₂ using OLS by choosing different values for β₀ by "trial and error procedure" (Phillips's words), what sort of problem might you run into with the left-hand side variable for some of the observations?

Calculate probabilities of events based on sample point probabilities.

Understand the concepts and methods involved in experimental research designs.

Identify and explain the placebo effect and its implications in psychological research.

Understand the significance of random assignment and random sampling in experimental research.

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Definitions:

Stratified Random

This refers to a sampling method where the population is divided into subgroups (strata) that share similar characteristics, and a random sample is then drawn from each stratum.

Achievement Tests

Standardized tests designed to assess how much knowledge and skills a person has acquired in a specified area.

Haphazard Sampling

A non-systematic sampling method where items or individuals are selected randomly in an unplanned way, without any specific pattern.

Simple Random

A sampling method in which every member of a population has an equal chance of being selected for the sample.