Hamburg University EMLE

Prof. Dr. Michael Funke

Dipl.-Vw. Katja Hillmann

Basic Quantitative Methods

Tutorial 1

Question 1: Basic data handling Chapter 2

Work�le Income.wf1 contains data on the logged personal income and consumption in the

US from 1945Q1 to 1994Q2.

1. Make one time series graph that contains both of these variables (Note that 1954Q1

means the �rst quarter(i.e. January, February and March) of 1954).

2. Transform the logged personal income to growth rates. Note that the percentage

change in personal income between period t−1 and t is approximately 100× [ln(Yt)−ln(Yt−1)] and the data provided in Income.wf1 is already logged. Make a time series

graph of the series you have created.

Question 2: Scatter plot and descriptive statistics Chapter 2

Work�le Forest.wf1 contains data on Y = deforestation (average annual forest loss), X= population density (in number of people per 1.000 hectares), W = change in cropland

(in %) and Z = change in pasture land (in %) over the period 1980-1990.

1. Construct and interpret scatter plots of deforestation (Y ) against both W and Z.Does there seem to be a positive relationship between deforestation and the expansion

of pasture land? And how is deforestation related to the expansion of cropland?

2. Construct and interpret descriptive statistics for the variables pasture change (Z)and cropland (W ).

3. What is the Nullhypothesis of the Jarque-Bera Test? How are the results of the tests

for Z and W?

Question 3: Correlation Chapter 3

Use the data in Forest.wf1.

1. Calculate and interpret the mean, standard deviation, minimum and maximum of

deforestation and population density.

2. Verify that the correlation between these two variables is 0.66.

1

Question 4: Correlation and causality Chapter 3

The work�le Hprice.wf1 contains data on houses sold (in $CAD) in Windsor, Canada in

the summmer of 1987.

1. Calculate and interpret the correlation between X = number of bathrooms and Y =

house price (variable �sale price�). To what extent it can be said that X causes Y?

2. Repeat part (1) for Y and Z = lot size and then for Y and W = number of bedrooms.

Question 5: Hypothesis testing Chapter 5

Use Work�le Forest.wf1.

1. Run the following regression:

Yi = α + βWi + εi (1)

and interpret your results. Can you reject the hypothesis that expansion of cropland

has no e�ect on deforestation rates?

2. Run a regression of Y on Z and interpret your results. Can you reject the hypothesis

that expansion of pasture land has no e�ect on deforestation rates?

3. Brie�y explain the F − test and the results for the regressions in (1) and (2).

Question 6: Simple Regression Chapter 4

Use Work�le Forest.wf1.

1. Run a regression of Y on X and interpret the estimated coe�cients.

2. Create a new variable, X̃ , by dividing X by 100. Now, regress Y on X̃. Does your

interpretation of β̂ remain unchanged? How does α̂ di�er from (1)?

Question 7: R2 Chapter 4

Use the data in Forest.wf1 (see the previous question).

1. Consider the regression in Question 6 (1). Construct and interpret the scatter plot

of X and Y together with their �tted values.

2. Calculate the correlation between X and Y . Explain R2 and discuss the relationship

between correlation and R2.

2