Simple Regression (Regression)

For all the exercises this week we are going to use eth_allrounds_final.dta. Before we start, after loading the data:

• Drop all observations that are not maize
• Generate a variable called fert that measures nitrogen fertilizer in kg per hectare (nitrogen_kg / plot_area_GPS). Label the variable.
• Generate a variable called labor that measures total labor in days per hectare (total_labor_days / plot_area_GPS). Label the variable.

This maize only data set with per hectare inputs will be the one we use for all the exercises this week. It will make our yield function regressions more realistic.

1. Create a scatter plot of yield_kg against fert with a fitted line (lfit)
2. Run reg yield_kg fert
   • What is the slope on fert and how do you interpret it?
   • Is it statistically significant at the 5% level?
   • What is the R-squared and what does it mean?

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