Group 6 presentation

Masters of Science (MSc.) in

Global Financial Information Systems (GFIS)

Econometrics – Group Exercise

Group 6 – Question 1 – Parts F - J

Daire Naughton Garreth Conlon Robert Hoffman Denise Sheehy

Points

3 points

2 points

1 point

Y Variable Points

3 points

2 points

1 point

• The WEO database did not have information on Cuba

• Other sources - incomplete results

Cuba Omitted

Independent Variables

Compulsory Compulsory Intercept

Suppressed

Dummy Variable

X1:GDP based on PPP per

capita (UNITS)

X2:Population (Millions)

X3:Gross

national savings

X4:Annual

Temperature (AVG)

X5:Area (Sq. kms - 1,000s)

Histogram

Jarque-BeraResiduals

Mean -4.2E-15

Standard Error 5.670

Median -4.3483

Mode #N/AStandard Deviation 31.5699Sample Variance 996.6558

Kurtosis 0.8921

Skewness -0.2902

Range 150.4230

Minimum -80.6698

Maximum 69.7532

Sum -1.3E-13

Count 31 0.25 > 0.05 (Critical Value)

•R2 = 0.559 or 55.9%

•Adj R2 = 0.470 or 47%

Goodness of Fit

•R2 = 0.559 or 55.9%

•Adj R2 = 0.470 or 47%

Goodness of Fit

Not a particularly strong model

SSRm - SSRu/M F = (29899.67 - 19042.29)/3

SSRu/ (n - k - 1) u 19042.29/(22) = 4.181261

4.18 > 2.40

Ramsey Reset

SSRm - SSRu/M F = (29899.67 - 19042.29)/3

SSRu/ (n - k - 1) u 19042.29/(22) = 4.181261

4.18 > 2.40

Ramsey Reset

Null Hypothesis Rejected

• Internet Penetration as Proxy for Developed Nation

• Source: UN Statistical Pocketbook 2000-2012

Sixth Independent Variable

Compulsory Compulsory Intercept

Suppressed

Dummy Variable

X1:GDP based on PPP per

capita (UNITS)

X2:Population (Millions)

X3:Gross

national savings

X4:Annual

Temperature (AVG)

X5:Area (Sq. kms - 1,000s)

X6: Internet Users (% Penetration)

Internet Penetration - 2000

CountryInternet

Penetration Dummy Variable

CountryInternet

Penetration Dummy Variable

Ethiopia 0.00% 0 Spain 13.60% 1

Korea, Republic of 0.00% 0 France 14.30% 1

Kenya 0.30% 0 Italy 23.10% 1

Kazakhstan 0.70% 0 Norway 26.80% 1Ukraine 0.70% 0 United Kingdom 26.80% 1China 1.80% 0 Japan 30.00% 1

Belarus 1.90% 0 Germany 30.20% 1

Russian Fed. 2.00% 0 Denmark 39.20% 1

Brazil 2.90% 0 United States 43.10% 1

Jamaica 3.10% 0 Netherlands 44% 1

Romania 3.60% 0 Sweden 45.70% 1

Turkey 3.80% 0 Australia 46.80% 1

Bulgaria 5.40% 0 Switzerland 47.10% 1

Hungary 7.00% 0 Canada 51.30% 1

Poland 7.30% 0

Greece 9.10% 0

Czech Republic 9.80% 0

Regression Statistics 5 Variables

Including X6

Multiple R 0.747 0.748

R Square 0.559 0.559

Adjusted R Square 0.470 0.449

Standard Error 34.583 35.268

Observations 31 31

Interpret New Regression Coefficient

Note reduced Adj R2

CoefficientsStandard

Error t Stat P-valueLower 95%

Upper 95%

Intercept 3.403 22.556 0.151 0.881 -43.15149.95

7

X1: Population (Millions) 0.047 0.035 1.345 0.191 -0.025 0.118X2: GDP based on PPP per capita (UNITS) 0.001 0.001 0.580 0.567 -0.002 0.004

X3: Gross national savings 0.673 1.037 0.649 0.523 -1.468 2.813X4: Annual Temperature (AVG) - Intercept Supressed -0.349 1.021 -0.342 0.736 -2.455 1.758

X5: Area (Sq. kms - 1,000s) 0.006 0.002 3.562 0.002 0.003 0.010X6: Internet Users (>10% Penetration - Dummy Variable) 6.104 31.103 0.196 0.846 -58.090

70.297

Statistical Significance



Upper 95%

Intercept -43.15149.95

7

X1: Population (Millions) -0.025 0.118X2: GDP based on PPP per capita (UNITS) -0.002 0.004

X3: Gross national savings -1.468 2.813X4: Annual Temperature (AVG) - Intercept Supressed -2.455 1.758

X5: Area (Sq. kms - 1,000s) 0.003 0.010X6: Internet Users (>10% Penetration - Dummy Variable) -58.090

70.297

Confidence Intervals



Upper 95%

Intercept 0.881

X1: Population (Millions) 0.191X2: GDP based on PPP per capita (UNITS) 0.567

X3: Gross national savings 0.523X4: Annual Temperature (AVG) - Intercept Supressed 0.736

X5: Area (Sq. kms - 1,000s) 0.002X6: Internet Users (>10% Penetration - Dummy Variable) 0.846

P-Value

•Theory: Proxy for developed nation

•T-test: Variable’s estimate coefficient is not significant in the expected direction

•Adj R2: Reduced from 47% to 44.9%

•Bias: No significant changes to other variable

X6 - Relevance

•Theory: Proxy for developed nation

•T-test: Variable’s estimate coefficient is not significant in the expected direction

•Adj R2: Reduced from 47% to 44.9%

•Bias: No significant changes to other variables

•Conclusion: X6 is irrelevant

X6 - Relevance

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.B Std. Error Beta(Constant) 3.405 22.556 .151 .881X1_Population_Millions .047 .035 .222 1.345 .191

X2_GDP_Units .001 .001 .201 .580 .567

X3_Gross_National_Savings .673 1.037 .106 .648 .523

X4_Temp_Intcpt_Suppressed -.348 1.021 -.056 -.341 .736

X5_Area_sq_kms .006 .002 .569 3.562 .002X6_DV1_Internet_Penetration

6.105 31.103 .065 .196 .846

a. Dependent Variable: Y_National_Performance

Stepwise

Coefficients

Model



t Sig.B Std. Error Beta(Constant) 3.405X1_Population_Millions .047

X2_GDP_Units .001

X3_Gross_National_Savings .673

X4_Temp_Intcpt_Suppressed -.348

X5_Area_sq_kms .006X6_DV1_Internet_Penetration

6.105


Positive Relationship

Coefficients

Model



t Sig.B Std. Error Beta(Constant) .881X1_Population_Millions .191

X2_GDP_Units .567

X3_Gross_National_Savings .523

X4_Temp_Intcpt_Suppressed .736

X5_Area_sq_kms .002X6_DV1_Internet_Penetration

.846


Significance

Variables Entered

ModelVariables Entered

Variables

Removed Method

1 X5_Area_sq_kms

Stepwise (Criteria: Probability-of-F-to-enter <= .050, Probability-of-F-to-remove >= .100).


Variables Entered

Variables RemovedVariables Removed

Model Beta In t Sig.Partial

Correlation

Collinearity Statistics

Tolerance VIFMinimum Tolerance

X1_Population_Millions .200 1.326 .196 .243 .793 1.260 .793

X2_GDP_Units .200 1.496 .146 .272 .998 1.002 .998

X3_Gross_National_Savings .144 .992 .330 .184 .882 1.134 .882

X4_Temp_Intcpt_Suppressed

.064 .443 .661 .083 .918 1.090 .918

X6_DV1_Internet_Penetration

.203b 1.517 .140 .276 .999 1.001 .999

•Not particularly good

•Too many unknown variables

Overall a Good Model?

End

Education

Group 6 presentation