Multicollinearity Problems - Probability of Rejecting the Null Hypothesis - Econometrics Assignment Help

Assignment Task :

a) During the starters, Tom argues that the presence of more guns in the population should increase violent crime rates. Interpret the effect of UCCW on crime rates in 
b) Interpret the effect of educ variable in MODEL 1 and give a real life argument  explaining this effect.  
c) Find the fraction of variability in crime rates that MODEL 2 captures. Is MODEL 2 globally significant? Explain your answer.  
d) Justify why the following statement is false: 

In MODEL 2 there are not multicollinearity problems. 
e) By comparing estimation results of MODEL 1 and MODEL 2, justify in a  theoretical way why the following statement is false: 
When performing an individual t-test on pmale variable, the probability of rejecting the null hypothesis in MODEL 2 will be lower than rejecting it in MODEL 1.  
f) During the main course, Tom argues that the District of Columbia could be an outlier in Ms. Smith research paper and therefore, the best solution to be applied would be to increase the sample size of the sample. Do you agree with Tom ?s solution? Explain your answer. 
g) Ms. Smith makes an enthusiastic defense of the OLS estimators and the Gauss- Markov Theorem. Tom is desperate to make an intelligent comment about it and tries to remember something of the Econometrics course he took this year at FOM. If you were Tom, what would be your answer to the following question: 
Interpret  
h) Interpret the coefficient associated to log(pcincome) in MODEL 3. Is this effect  significantly different from one? Explain your answer. 
i) At dessert time, Tom suggests that public policies to reduce crime rates should be focused in both reducing unemployment rates and improving educational levels of the population since unemployment and education have almost the same effect on crime rates (but with an opposite sign). 
Explain whether Tom ?s suggestion is fulfilled in MODEL 3  
j) In a last attempt to say something relevant, Tom argues that states with a larger proportion of black population are likely to suffer from more crimes. Is this argument consistent with MODEL 4? Explain it in terms of both interpretation and statistical significance. 
k) Given the models in , which would be your preferred model? Explain the  reasons of your choice (not only based on explanatory power). 

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