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Question: The appendix to chapter one will be very useful in answering this question, if you need a refresh...
The appendix to chapter one will be very useful in answering this question, if you need a refresher or introduction to regression analysis. The following equation is the regression results of a study on infant mortality rates. There were 20 countries in the study and each country had six consecutive years of data collected. All of the variables have been converted to logarithms so the coefficients can be treated as elasticities. Below each coefficient is its t-statistic. Use the results of this regression equation to answer the following questions. The appendix to chapter one would be very useful in answering this question.
IMR = 3.9 - .06 TIME - .8 RGDP - .5 PHYS + .7 URBAN - .004 FLFPR - .1 ED
(2.60) (1.112) (6.83) (6.89) (4.21) (1.21) (2.34)
Adjusted R2 = .954 N = 110
Variables Defined
IMR = infant mortality rate for each country for each year
TIME = the year in each country, such as 2018. This is a time trend to capture changes in technology and knowledge.
RGDP = real gross domestic product per capita in each country per year
URBAN = percentage of population in urban areas for each county for each year
FLFPR = female labor force participation rate for each country for each year
ED = level of education for each country for each year
Based upon the information provided above, answer the following questions.
A. What percentage of the variation in infant mortality rates is explained by the variables? Justify or explain your answer.
B. An increase in which one variable will increase infant mortality rates? Justify or explain your answer.
C. Using health production theory provide a hypothesis or theory about the relationship (direct or inverse) between the first three independent variables ( TIME, RGDP and URBAN) and infant mortality rates.
D. Are the three hypotheses or theories you stated above supported by the regression results above? Explain your answers.
E. Based upon the findings above, would you expect infant mortality rates to be higher in Japan or Mexico? Why?
PLEASE DO NOT HAND WRITE*******
Explanation / Answer
IMR = 3.9 - .06 TIME - .8 RGDP - .5 PHYS + .7 URBAN - .004 FLFPR - .1 ED
(2.60) (1.112) (6.83) (6.89) (4.21) (1.21) (2.34)
Adjusted R2 = .954 N = 110
A. 95.4% of the variation in infant mortality rates is explained by the above variables. This statistic is represented by the R-square of the regression model.
B. An increase in URBAN variable will increase infant mortality rates. It also makes sense since those living in urban areas have access to healthcare and also more aware on childcare due to education.
C. Health production theory states how health outcome is a function of certain inputs that are used together.
IMR may decline over time- that is there may be a time trend that is responsible for the decline. There are time varying unobserved factors which are captured by this variable. These can be specific inputs of the health production theory but may not be observable
Same way, RGDP is likely to be negatively linked to IMR. The hypothesis is that richer countries are able to allocate a large proportion of their output to achieiving positive health.outcomes. This results in decline in IMR.
Urbanization is another positive factors that can contribute to IMR. Urbanization again brings with itself some benefits that can reduce IMR due to higher education and access to better medicial facilities.
D.
We observe a negative relationship between time and IMR (i.e. a negative coefficient of time). It implies that IMR is declining over time. A negative relationship is also observed between RGDP and IMR i.e. richer countries tend to have lower IMR. This may happen on account because the richer countries spend a good amount on health and education. Also, a negative association is seen between IMR and Urban.
E. Based on above finding i would expect IMR to be higher in Mexico since its poorer relative to Japan. Level of urbanisation is also low in Mexico. Female labor force participation and education level is also higher for Japan compared to Mexico.
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