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:

Benefits for Retirees

Programs or perks provided to retired employees, which can include pension plans, health insurance, and other forms of financial support.

Decisions to Close a Plant

The process and considerations involved in shutting down a manufacturing or production facility, often involving economic, social, and environmental factors.

Distributive Bargaining

A negotiation strategy in which parties strive to divide a fixed amount of resources, often resulting in a win-lose situation.

Integrative Bargaining

A negotiation strategy focused on finding mutually beneficial agreements, where parties look for solutions that satisfy the interests of all involved rather than competing for limited resources.