Challenge 9 (Regression)

This challenge uses the maize only version of eth_allrounds_final.dta with per hectare inputs to practice skills from all three regression lectures (regression, standard errors, concerns).

• Start by creating a variable called seed that measures the total seed value for each plot in USD per hectare
• Now run a multivariate regression of yield_kg on fert, labor, seed, i.irr, i.intercropped, i.crop_shock, i.admin_1, and i.wave

1. Interpret the coefficient on labor using the phrase “holding fixed”

2. Run estat vif. Which variables, if any, have VIF values above 5? Explain whether collinearity is a concern in this specification

3. Use predict yhat and predict resid, residuals to generate predicted values and residuals

• Create a scatter plot of resid against yhat with yline(0)
• Is there evidence of heteroskedasticity?

4. Run the same regression three ways (normal s.e., robust s.e., and s.e. clustered at household)

• What are the standard errors on fert each time?
• Which approach is most appropriate for these data and why?

5. Run a regression with an interaction between fert and labor. How do you interpret the coefficient on fert, labor, and c.fert##c.labor?