Explore BrainMass
Share

# probability of the error (STATA)

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

1. Yes, we use STATA to test.

2. Tax is the dependent variable: tax = B1 + B2income + e

The gross income and tax paid by a cross-section of 30 companies in
1988 and 1989 is given in the file tax.dta

Consider the estimate for B2 for 1989 and the corresponding estimated
variance. Pretend that the estimated variance is the same
as the true variance var(b2), and assume that b2 is normally distributed.
Find the probability that the sampling |b2 &#8722; B2| is
(i) less than 0.04 and (ii) less than 0.01.

https://brainmass.com/economics/econometric-models/probability-error-stata-55163

#### Solution Preview

Use stata commend to regress tax revenue on income in year 1989:
regress tax income if year==1989
&#12288; Number of obs 30
Source SS df M &#12288; &#12288; F(1, ...

#### Solution Summary

The expert examines the probability of the error (STATA).

\$2.19