Kiel and McClain (1995)1 analyzes the effects of building a garbage incinerator in a Massachusetts town. Below is the printout of a bivariate regression of the selling price of houses (Y) on a binary variable denoting whether the given house is located near the incinerator (X). The data was collected from the tax assessor`s office of the year 1981, when the construction of the incinerator began.
Y = 134147.90 - 36171.89·X R2 = .1566
(4333.57) ( ) n = 142
[ ] [ -5.10 ]
SSR = __________
TSS = 2.77·1011
SER = __________
The terms in parentheses are standard errors of the OLSE's and the terms in square brackets are the corresponding t-statistics.
a) Fill in all of the blanks in the printout.
b) Find the 99% confidence intervals for the intercept and slope terms, and also the p-value for each. Are the coefficients significant at the 1% level?
c) Provide an economic and econometric interpretation for each of the slope and intercept parameters, noting the implications of the answers you gave to part (b).
d) Draw the regression line on a well-labeled graph, carefully labeling coefficient estimates.