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Coefficients Standard Error

Intercept -5.97 4.18

GDP 0.18 0.001

a) Write the regression equation. What are the economic interpretations of the estimated coefficients? Does it make

sense?

b) Explain how to calculate the TSS (Total Sum of Square) ESS (Explained Sum of Square) RSS (Residual Sum of

Square) and their degrees of freedom. What are they from this model?

c) Calculate the R square and adjusted R square and explain them. What can you say about the goodness of fit?

d) What are the sample variance of the estimated residuals (ei) and the sample variance of TRECEIPT? Show the

equations and calculate them using above results.

e) Calculate the sample variances of estimated coefficients and explain the sample distribution of the estimated

coefficients.

f) According to the estimated model what are the predicted tax receipts of following years?

YEAR GDP

2001 10128.0

2002 10469.6

2003 10960.8

2004 11712.5

2005 12455.8

2006 13253.9

g) Perform the t tests of the coefficients based on the null hypothesis of zero and alternative hypothesis of nonzero.

Are they significant?