Use the Growth data set on the course website and review the description of the variables in the accompanying document. Run the following five regressions and report the results in a single nicely formatted table:
-Model 1: Growth on TradeShare and YearsSchool;
-Model 2: Growth on TradeShare and ln(YearsSchool);
-Model 3: Growth on TradeShare, ln(YearsSchool), Rev Coups, Assassinations, and ln(rgdp60);
-Model 4: Growth on TradeShare, ln(YearsSchool), Rev Coups, Assassinations, ln(rgdp60), and an interaction between TradeShare and ln(YearsSchool);
-Model 5: Growth on TradeShare, TradeShare squared, TradeShare cubed, ln(YearsSchool), Rev Coups, Assassinations, and ln(rgdp60).
B) Construct a scatterplot of Growth on YearsSchool. Does the relationship appear linear? Explain. Use the plot to explain why Model 2 fits better than Model 1.
C) In 1960, a country contemplates an education policy that will increase average years of schooling from 4 years to 6 years. Use Model 1 to predict the change in Growth. Use regression 2 to predict the change in Growth.
D) Using Model 4, is there evidence that the relationship between TradeShare and Growth depends on the level of education in the country?
E) Using Model 5, is there evidence of a non-linear relationship between TradeShare and Growth?
F) In 1960, a country contemplates a trade policy that will increase the average value of TradeShare from 0.5 to 1. Use Model 3 to predict the change in Growth. Use Model 5 to predict the change in Growth. How do these predictions compare?