# How will consistency in your OLS estimation affect your confidence intervals?

Mod Show more Based on annual data from 1990-2010 the following regressions were obtained: Model A: i = 2.69 0.48Xi R 2 = .66 (.122) (.114) Model B: ln(i) = 0.78 0.25ln(Xi) R 2 = .74 (.0115) (.049) Where: Yi = cups of coffee consumed by the ith person per day Xi = price of a cup of coffee in dollars ln( ) = natural log of ( ) *Standard errors are reported in parentheses A. [6 points] How do we interpret the slope coefficients in the two models? B. [8 points] Test the significance of the independent variable in each model using = .05. C. [8 points] Construct a 95% confidence interval for the slope coefficient in each model. What is this measure telling us? How will consistency in your OLS estimation affect your confidence intervals? D. [8 points] Since the R 2 is larger in Model B compared to Model A is this evidence that Model B is superior to Model A? Explain why or why not. Show less

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