Your Textbook Estimates the Initial Relationship Between the Percentage Change $\widehat { \%ChgP}\text {t }=-0.40+0.47 F D D_{\mathrm{t}}$

question 20

Essay

Your textbook estimates the initial relationship between the percentage change of real frozen OJ and the freezing degree days as follows: $\widehat { \%ChgP}\text {t }=-0.40+0.47 F D D_{\mathrm{t}}$
$(0.22)\quad(0.13)$
$t=1950: 1-2000: 12, R^{2}=0.09, S E R=4.8$
a. Calculate the t-statistic for the slope coefficient. Can you reject the null hypothesis that the coefficient is zero in the population?
b. The above regression was estimated using HAC standard errors. When you re-estimate the regression using homoskedasticity-only standard errors, the standard error of the slope coefficient drops to 0.06. Calculate the t-statistic for the slope coefficient again. Which of the two standard errors should you use for statistical inference?

---

Definitions:

Anticonvulsant

A type of medication used to prevent or treat seizures in individuals with epilepsy or other seizure disorders.

Schizophrenia

A profound mental illness marked by significant alterations in cognition, perception, feelings, speech, self-identity, and actions.

Major Depression

An emotional disorder defined by a consistent feeling of despondency or a waning interest in day-to-day pursuits, drastically impeding daily activities.

Substance Abuse

The detrimental or dangerous consumption of mind-altering substances, such as alcohol and illegal drugs.