Consider a Situation Where Economic Theory Suggests That You Impose

Essay

Consider a situation where economic theory suggests that you impose certain restrictions
on your estimated multiple regression function.These may involve the equality of
parameters, such as the returns to education and on the job training in earnings functions,
or the sum of coefficients, such as constant returns to scale in a production function.To
test the validity of your restrictions, you have your statistical package calculate the
corresponding F-statistic.Find the critical value from the F-distribution at the 5% and 1%
level, and comment whether or not you will reject the null hypothesis in each of the
following cases.
(a)number of observations: 152; number of restrictions: 3; F-statistic: 3.21