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?

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Definitions:

Empathy

The ability to understand and share the feelings of another.

Power Distance

Variation in the extent to which members of a culture or an organization (especially those with less power) accept an unequal distribution of power.

Power Distance

The degree to which individuals in a society accept the uneven distribution of power among members.

System Justification

A theory that suggests people have a psychological need to view existing social, economic, and political systems as fair, legitimate, and justified.