Assume the next equation about the level of intangible assets:

Boston University Regression Analysis Questionnaire

Q1: Assume the next equation about the level of intangible assets:

????????????????????????????????????????_???????????????????????? = ????0 + ????1???????????? + ????2????&???? + ????3???????????? + ????4???????????? + u Where ????????????????????????????????????????_????????????????????????: the amount of intangible assets (measured in USD). ????????????: is the age of the corporation. ????&????: the research and development expenditure of a corporation (measured in USD). ????????????: returns on assets. ????????????: A dummy that takes the value 1 if the corporation has foreign operations and zero otherwise.

1.1 Describe what each of ????1, ????2, ????3, and ????4 imply, ceteris paribus.

1.2 Suppose that instead of the eq. (2)

????????????????????????????????????????_???????????????????????? = ????0 + ????1???????????? + ????2????&???? + ????3???????????? + ????4???????????? + u You have the model: ???????????????????????????????????????????? = ????0 + ????1???????????? + ????2????&???? + ????3???????????? + ????4???????????? + ???? (3) Where ????????????????????????????????????????????: a dummy that takes 1 if a corporation’s ????????????????????????????????????????_???????????????????????? > 0 (i.e., a corporation has intangible assets) and zero otherwise. ????????????: is the age of the corporation. ????&????: the research and development expenditure of a corporation (measured in USD). ????????????: returns on assets. ????????????: A dummy that takes the value 1 if the corporation has foreign operations and zero otherwise. Describe what each of ????1, ????2, ????3, and ????4 imply, ceteris paribus. Critically assess the reliability of the ????1 OLS estimator?

1.3 Propose and explain in detail a test to examine whether the ????&???? has a different (i.e., heterogeneous) effect for those corporations with foreign operations and those without foreign operations.

Q2 The following equation was estimated for the fall and second semester students:

???????????????? ? = −2.12 + 0.90???????????????????? + 0.193???????????????????????? + 0.0014????????????????? eq(4)

(0.55) (0.175) (0.064) [0.55] [0.166] [0.074] (0.0003) [0.0012]

???? = 269; ???? 2 = 0.465 (for both equations).

Here,

????????????????: term GPA (grade point average), ????????????????????: a weighted average of overall GPA in courses taken, ????????????????????????: is GPA prior to the current semester, ????????????????????: total credit hours prior to the semester, The usual and heteroskedasticity-robust standard errors are reported in parentheses and brackets, respectively.

2.1 Do the variables ????????????????????, ????????????????????????, and ???????????????????? have the expected estimated effects?

2.2 Does heteroskedasticity affect the statistical significance of the estimations in eq. (4)