Harvard Ec 1123 Econometrics Problem Set 4 - Tarun Preet Singh
Harvard Ec 1123 Econometrics Problem Set 4 - Tarun Preet Singh
Harvard Ec 1123 Econometrics Problem Set 4 - Tarun Preet Singh
Worked With:
Alexander Marcus and Alex Sloan
Economics 1123, Problem Set 4
1)
Table 1: Determinants of Terrorism, ctd.
(6) (7) (8) (9)
Dependent variable: lnftmpop lnftmpop lnftmpop lnftmpop
Regressor:
higdppc -2.8379** -3.8441 -.3837 -.5926
(.9987) (2.4057) (1.0421) (1.0844)
lackpf -.2482 .1312 1.6218** 1.9774**
(.1649) (1.0601) (.5245) (.5284)
lackpf2 __ -.0403 -.1886** -.2280**
(.1137) (.0615) (.0604)
higdppc × lackpf .6449** 1.8890 __ __
(.2377) (1.2161)
higdppc × lackpf2 __ -.1959 __ __
(.1407)
ethnic __ __ 1.4617 1.2365
(1.0450) (.9956)
religion __ __ -3.0074* -3.4056*
(1.4180) (1.6494)
higdppc × ethnic __ __ -1.2973 -.5015
(1.6976) (1.8009)
higdppc × religion __ __ 2.6547 2.5105
(1.8997) (2.0183)
Mideast __ __ __ -1.2532
(1.3117)
Other regional dummies (latinam, No No No Yes
easteurope, africa, eastasia)?
Intercept -.7172 -1.5174 -4.3760** -3.7822*
(.8423) (2.2381) (1.2595) (1.5458)
F-statistics testing the hypothesis that the population coefficients on the indicated
regressors are all zero:
higdppc × lackpf, __ 1.34 __ __
higdppc × lackpf 2 (.2689)
lackpf2, higdppc × lackpf2 __ 4.12 __ __
(.0204)
lackpf, lackpf2 __ 1.10 4.81 7.21
(.3390) (.0112) (0.0016)
higdppc × ethnic, higdppc × religion __ __ 1.24 0.79
(.2970) (0.4606)
ethnic, religion, __ __ 1.45 1.66
higdppc × ethnic, higdppc × religion (.2266) (0.1705)
Other regional dummies __ __ __ 0.63
(0.6422)
Regression summary statistics:
R2 0.0854 0.1311 0.1168 0.0773
R2 0.1220 0.1891 0.2015 0.2290
SER 1.8077 1.7619 1.7694 1.8085
n 76 76 74 74
Notes: Heteroskedasticity-robust standard errors are given in parentheses
under estimated coefficients, and p-values are given in parentheses under F-
statistics. The F-statistics are heteroskedasticity-robust. Coefficients are
individually statistically significant at the +10%, *5%, **1% significance level.
The “other regional dummies” included in regression (5) are latinam,
easteurope, africa, and eastasia (the omitted case is Western Europe
combined with North America)
2)
higdppc=1
lnftmpop = -3.555136 + .3966958(lackpf)
(.5366) (.1712)
2
0
-2
-4
-6
0 2 4 6 8
lackpf
higdppc=0
lnftmpop = -.717181 + -.248253 (lackpf)
(.8423) (.1649)
2
0
-2
-4
-6
2 3 4 5 6 7
lackpf
b) When all else is constant, as countries with high gdp per capita
(higdppc=1) lose political freedoms, they experience more terrorism related
deaths, and as countries with low gdp per capita (higdppc=0) lose political
freedoms they experience more terrorism related deaths.
c) Null hypothesis: the coefficients on lackpf2 and higdppc x lackpf2 are equal
to 0.
Alternative hypothesis: at least one of the coefficients is not equal to 0.
We are testing whether or not the two quadratic fits, which fit lnftmpop and
lackpf for higdppc=1 and higdppc=0, are equal, meaning wheter or not they
are the same parabola.
Using an f-test we get an f-value of 1.34 and a p-value of .2689 which is
greater than .05 meaning we fail to reject the null hypothesis that all the
coefficients are equal to 0.
5) Looking at the data from problem sets 3 and 4, we can see that political
freedom appears to be the most consistent predictor. This reaffirms what we
saw in problem set 3 where we saw a quadratic relationship between lackpf
and lnftmpop and that countries with medium levels of political freedoms had
more terrorism than those with low or high levels of political freedoms.
6)
a) Omitted variable bias is a possible reason to doubt this study. For example,
if we had considered income inequality and not just GDP per capita, we could
have seen a correlation between terrorism and income inequality that may
not be accounted for in GDP per capita since income inequality would be
relative to each country. Further, if we looked at the actual religions in
present in each country it could be possible that countries with a specific
religion are more likely to have more terrorism related deaths and that these
same countries have little religious diversity. Therefore, it is possible that
there was omitted variable bias in this study.