Please note, the data provided is a cross sectional data and is not time series data, so,

time series test are not performed only cross sectional data’s test is performed. I have
created an Eview project you can see regression analysis output I have saved and
results obtained from the model you sent me.

I. Descriptive Statistics & Multicollinearity

A. Copy and paste and insert HERE the EViews descriptive statistics
table showing the following summary statistics for the dependent and
independent variables used in your model.

NOTE: Make sure each variable is specified exactly as it will appear

in your econometric model (e.g., % changes, 1st differences, etc.).

1. Mean
2. Standard Deviation
3. Coefficient of Variation
4. Maximum value
5. Minimum value
6. Jarque-Bera Test Statistic (and p-value)
7. N (number of observations)
 MEDIAN_HOUS TOTAL_EDUCA TOTAL_POPUL TOTAL_POVER TOTAL_UNEMP
EHOLD_INCOM TION_LESS_TH ATION_2017 TY_2017 LOYED_2017
E_2017 AN_HIGHSCHO
OL_2013_2017
Mean 51233.49 17237.15 203662.5 26681.49 4376.096
Median 49054.00 2642.000 26476.00 3964.000 545.5000
Maximum 136191.0 4543530. 39399349 5164169. 919803.0
Minimum 22679.00 4.000000 88.00000 13.00000 5.000000
Std. Dev. 13502.93 124402.8 1249211. 168322.0 27825.63
Skewness 1.425671 23.02538 18.16525 18.30956 18.93706
Kurtosis 6.552862 696.8664 444.0317 441.4146 486.0993

Jarque-Bera 2758.417 64133633 26053403 25741924 31211413

Probability 0.000000 0.000000 0.000000 0.000000 0.000000

Sum 1.63E+08 54865860 6.50E+08 85167303 13959746

Sum Sq. Dev. 5.81E+11 4.92E+13 4.98E+15 9.04E+13 2.47E+12

Observations (N) 3190 3183 3193 3192 3190

B. Tests for Multicollinearity

Place EViews output of multicollinearity tests HERE

1. Include the table of simple correlation coefficients (r2's).

TOTAL_POPULATI MEDIAN_HOUSEH TOTAL_EDUCATIO TOTAL_UNEMPLO
ON OLD_INCOME N YED
TOTAL_POPULATI 1 0.05471741506385 0.01029702964622 0.01404551951384
ON 248 446 223
MEDIAN_HOUSEH 0.05471741506385 1 0.01746195923094 0.12165148347932
OLD_INCOME 248 3 73
TOTAL_EDUCATI 0.01029702964622 0.01746195923094 1 0.00918681035545
ON 446 3 1042
TOTAL_UNEMPLO 0.01404551951384 0.12165148347932 0.00918681035545 1
YED 223 73 1042

Covariance Analysis: Ordinary

2
Date: 12/15/19 Time: 22:56
Sample: 1 3193
Included observations: 3180
Balanced sample (listwise missing value deletion)

Covariance
Correlation
t-Statistic TOTAL_POP MEDIAN_HO TOTAL_EDU TOTAL_UNE
ULATION USEHOLD_I CATION MPLOYED
NCOME
TOTAL_POPULATI 1.55E+12
ON
1.000000
-----

MEDIAN_HOUSEH 9.19E+08 1.82E+08

OLD_INCOME
0.054717 1.000000
3.089254 -----

TOTAL_EDUCATI 1.60E+09 29305619 1.55E+10

ON
0.010297 0.017462 1.000000
0.580513 0.984546 -----

TOTAL_UNEMPLO 4.87E+08 45715023 31854722 7.76E+08

YED
0.014046 0.121651 0.009187 1.000000
0.791877 6.909267 0.517917 -----

2. Include EViews "centered" variance inflation factors (VIFs) for

each explanatory (X) variable (i.e., VIF = 1/1-R2)
Variance Inflation Factors
Date: 12/15/19 Time: 23:11
Sample: 1 3193
Included observations: 3179

Coefficient Uncentered Centered

Variable Variance VIF VIF

C 2032490. 15.52998 NA
TOTAL_POPULATION 8.46E-08 1.029588 1.003160
TOTAL_EDUCATION 8.45E-06 1.019682 1.000445
TOTAL_UNEMPLOYED 0.000171 1.040194 1.015080
MEDIAN_HOUSEHOLD
_INCOME 0.000733 15.70874 1.018153

3. Evaluate both tests for evidence of multicollineaity. Do you need

to address/correct this problem? How will you solve the problem?

3
 C. For each correctly specified explanatory (X) variable, provide a clearly
labeled "scatterplot" diagram against the dependent (Y) variable.
Please include a regression line and r2 on the graph.

6,000,000

TOTAL_POVERTY=-562.2+0.1337*TOTAL_POPULATION
5,000,000

4,000,000
Total Poverty 2017

3,000,000

2,000,000

1,000,000

0 4,000,000 12,000,000 20,000,000 28,000,000 36,000,000

Total Population 2017
6,000,000

5,000,000
Total Poverty 2017=2.606e+04+0.07418*Total Unemployed 2017
TOTAL_POVERTY

4,000,000

3,000,000

2,000,000

1,000,000

0
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000

TOTAL_UNEMPLOYED

4
 6,000,000

5,000,000 TOTAL_POVERTY=2.659e+04+0.008864*TOTAL_EDUCATION

4,000,000
Total Poverty 2017

3,000,000

2,000,000

1,000,000

0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000

Total Education Less Than Highschool 2013-2017
II. Preliminary Model Estimates (3 pages)

A. Place the EViews output for your preliminary model HERE.

Simple Model:

total_poverty = c(1) +
c(2)*total_population+c(3)*total_education+c(4)*total_unemployed+c(5)*median_household_income

total_poverty c total_population total_education total_unemployed median_household_income

Dependent Variable: TOTAL_POVERTY
Method: Least Squares (Gauss-Newton / Marquardt steps)
Date: 12/15/19 Time: 22:35
Sample: 1 3193
Included observations: 3179
TOTAL_POVERTY = C(1) + C(2)*TOTAL_POPULATION+C(3)
*TOTAL_EDUCATION+C(4)*TOTAL_UNEMPLOYED+C(5)
*MEDIAN_HOUSEHOLD_INCOME

Coefficient Std. Error t-Statistic Prob.

C(1) 2366.188 1425.654 1.659721 0.0971

C(2) 0.133655 0.000291 459.5384 0.0000
C(3) -0.004460 0.002907 -1.534160 0.1251
C(4) -0.006716 0.013079 -0.513461 0.6077
C(5) -0.055471 0.027079 -2.048470 0.0406

R-squared 0.985230 Mean dependent var 26445.03

Adjusted R-squared 0.985212 S.D. dependent var 167731.2
S.E. of regression 20397.36 Akaike info criterion 22.68577
Sum squared resid 1.32E+12 Schwarz criterion 22.69531
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Log likelihood -36054.03 Hannan-Quinn criter. 22.68919
F-statistic 52931.15 Durbin-Watson stat 1.937277
Prob(F-statistic) 0.000000

Please be sure to address the following points in your evaluation

below:

1. Do the signs on the estimated coefficients agree/conform to

theoretical expectations?

2. Is each coefficient statistically significant?

3. What does each estimated coefficient indicate about its impact on

your dependent variable?

4. Evaluate the model in terms of overall fit and significance.

B. Please perform the following tests, depending on whether your model

uses time series or cross sectional data:

1. Perform the Durbin-Watson Test (only for time series models):

(i) What was the appropriate critical du and dl or 4-du

and 4-dl values?

(ii) Is there evidence of first-order negative or positive

serial correlation? Why or why not?

(iii) What is a possible solution to the problem?

2. Perform the Granger Causality Test (only for time series models)

Place the EViews output of the Granger tests HERE.

NOTE: Both Y and X variables must be "stationary" by first taking

either first-differences, "D(variable)" or %Δ's "@PC(variable)"

(i) Use at least two different time lags (e.g., 1 or 2

years; 4 or 8 quarters) and show the results.

(ii) Does the test support or fail to support your initial

hypothesis of "causality"? Why or why not?
6
 (iii) Will you revise your initial specification based on
the GCT results? Why or why not?

3. Perform the (only for cross section models)

Place the results of the White Test HERE.

Heteroskedasticity Test: White

F-statistic 216.1813 Prob. F(14,3164) 0.0000

Obs*R-squared 1554.205 Prob. Chi-Square(14) 0.0000
Scaled explained SS 68421.85 Prob. Chi-Square(14) 0.0000

Test Equation:
Dependent Variable: RESID^2
Method: Least Squares
Date: 12/15/19 Time: 23:47
Sample: 1 3193
Included observations: 3179

Variable Coefficient Std. Error t-Statistic Prob.

C 8.25E+08 5.38E+08 1.533052 0.1254

TOTAL_POPULATION^2 -8.00E-05 3.08E-06 -25.99820 0.0000
TOTAL_POPULATION*TOTAL_EDUCATION -0.002090 0.001239 -1.686067 0.0919
TOTAL_POPULATION*TOTAL_UNEMPLOY
ED 0.005075 0.004695 1.080887 0.2798
TOTAL_POPULATION*MEDIAN_HOUSEHO
LD_INCOME 0.028839 0.001660 17.37277 0.0000
TOTAL_POPULATION 1915.838 128.5465 14.90385 0.0000
TOTAL_EDUCATION^2 0.000365 0.000393 0.929287 0.3528
TOTAL_EDUCATION*TOTAL_UNEMPLOYE
D 0.143727 0.064693 2.221674 0.0264
TOTAL_EDUCATION*MEDIAN_HOUSEHOL
D_INCOME -0.066849 0.060692 -1.101443 0.2708
TOTAL_EDUCATION 2611.239 3228.441 0.808823 0.4187
TOTAL_UNEMPLOYED^2 0.011421 0.007254 1.574485 0.1155
TOTAL_UNEMPLOYED*MEDIAN_HOUSEH
OLD_INCOME -0.486127 0.260651 -1.865052 0.0623
TOTAL_UNEMPLOYED 21167.08 14962.68 1.414658 0.1573
MEDIAN_HOUSEHOLD_INCOME^2 0.224499 0.149866 1.497997 0.1342
MEDIAN_HOUSEHOLD_INCOME -31183.95 18320.28 -1.702154 0.0888

R-squared 0.488897 Mean dependent var 4.15E+08

Adjusted R-squared 0.486636 S.D. dependent var 3.90E+09
S.E. of regression 2.80E+09 Akaike info criterion 46.34665
Sum squared resid 2.48E+22 Schwarz criterion 46.37526
Log likelihood -73653.00 Hannan-Quinn criter. 46.35691
F-statistic 216.1813 Durbin-Watson stat 1.978657
Prob(F-statistic) 0.000000

7
 (i) Was there evidence of heteroscedasticity?

(ii) Which variable is likely causing the problem?

(iii) What is a possible solution to this problem? Why?

C. Perform the Omitted Variable Test (OVT)

Dependent Variable: TOTAL_POVERTY
Method: Least Squares
Date: 12/15/19 Time: 22:47
Sample: 1 3193
Included observations: 3179

Variable Coefficient Std. Error t-Statistic Prob.

C 2366.188 1425.654 1.659721 0.0971

MEDIAN_HOUSEHOLD_INCOME -0.055471 0.027079 -2.048470 0.0406
TOTAL_UNEMPLOYED -0.006716 0.013079 -0.513461 0.6077
TOTAL_EDUCATION -0.004460 0.002907 -1.534160 0.1251
TOTAL_POPULATION 0.133655 0.000291 459.5384 0.0000

R-squared 0.985230 Mean dependent var 26445.03

Adjusted R-squared 0.985212 S.D. dependent var 167731.2
S.E. of regression 20397.36 Akaike info criterion 22.68577
Sum squared resid 1.32E+12 Schwarz criterion 22.69531
Log likelihood -36054.03 Hannan-Quinn criter. 22.68919
F-statistic 52931.15 Durbin-Watson stat 1.937277
Prob(F-statistic) 0.000000

Place the EViews results of the OVTs HERE.

Omitted Variables Test
Null hypothesis: TOTAL_POVERTY are jointly significant
Equation: EQ01
Specification: TOTAL_POVERTY C TOTAL_POPULATION
TOTAL_EDUCATION TOTAL_UNEMPLOYED MEDIAN_HOUSEHOLD
_INCOME
Omitted Variables: TOTAL_POVERTY

Value df Probability
t-statistic 6.56E+15 3173 0.0000
F-statistic 4.31E+31 (1, 3173) 0.0000
Likelihood ratio 205930.7 1 0.0000

F-test summary:
Mean
Sum of Sq. df Squares
8
Test SSR 1.32E+12 1 1.32E+12
Restricted SSR 1.32E+12 3174 4.16E+08
Unrestricted SSR 9.72E-17 3173 3.06E-20

LR test summary:
Value
Restricted LogL -36054.03
Unrestricted LogL 66911.32

Unrestricted Test Equation:

Dependent Variable: TOTAL_POVERTY
Method: Least Squares
Date: 12/16/19 Time: 00:21
Sample: 1 3193
Included observations: 3179

Variable Coefficient Std. Error t-Statistic Prob.

C 6.19E-11 1.22E-11 5.060315 0.0000

TOTAL_POPULATION 1.14E-15 2.05E-17 55.58731 0.0000
TOTAL_EDUCATION -3.63E-17 2.50E-17 -1.453930 0.1461
TOTAL_UNEMPLOYED -1.85E-17 1.12E-16 -0.165030 0.8689
MEDIAN_HOUSEHOLD_INCOME -1.29E-15 2.33E-16 -5.565807 0.0000
TOTAL_POVERTY 1.000000 1.52E-16 6.56E+15 0.0000

R-squared 1.000000 Mean dependent var 26445.03

Adjusted R-squared 1.000000 S.D. dependent var 167731.2
S.E. of regression 1.75E-10 Akaike info criterion -42.09205
Sum squared resid 9.72E-17 Schwarz criterion -42.08061
Log likelihood 66911.32 Hannan-Quinn criter. -42.08795
F-statistic 5.84E+32 Durbin-Watson stat 1.948838
Prob(F-statistic) 0.000000

1. Display the results from each test you performed.

2. Is the there evidence to suggest you have included the correct

explanatory variables in your models? Why/why not?

D. Perform Chow’s Breakpoint test:

Chow Breakpoint Test: 2000
Null Hypothesis: No breaks at specified breakpoints
Varying regressors: All equation variables
Equation Sample: 1 3193

F-statistic 8.466025 Prob. F(5,3169) 0.0000

Log likelihood ratio 42.18260 Prob. Chi-Square(5) 0.0000
Wald Statistic 42.33013 Prob. Chi-Square(5) 0.0000

9
 Place the EViews results of the Chow Test(s) HERE.

1. What is the reasoning or logic for selecting the observation

number (for cross section data) or breakpoint date (for time
series data)?

2. Interpret the test: did the Chow test confirm or fail to confirm
your hypothesis?

III. Final Model Estimates & Conclusions (1-2 pp.)

A. Place the EViews results for your Final “Best” Equation(s)

HERE

1. Describe the effect of each change that you made from your initial
model to the final version (e.g., effect on adjusted R-squared; DW
statistic, F-statistics, etc.)

2. Did the Schwarz and Akaike Information Criteria (AIC) help in

your model development and final specification? How?

3. Re-run any appropriate diagnostic test(s) [Place new test

results HERE] to see if each estimation problem has been
solved. What were the results of these new tests?

4. Does the model still suffer from any discernible deficiencies?

Why or why not? What should be done?

B. What type of policymaker(s) (e.g., Federal Reserve, President, Govenor,

CEO) might be interested in your model?

1. How might they employ your model in their decision-making

process?

2. What are some risks associated with using your model to make
predictions or forecasts about future economic, financial, or other
activities?

IV. Conclusions (1-2 Pages)

10
 A. Major findings:

1. Provide a cogent summary of the major conclusions from your

econometric analysis.

2. Briefly compare and contrast 2 of your strongest results with

those found in your literature review. Please be specific!

3. Briefly describe any policy and/or broader political and social

implications of your results

B. Describe an area for future research related to your econometric model

and analysis.
V. "Pooling/Panel" Models

A. OLS Models

[Place all relevant EViews output after each question, then

answer the question]

1. Show the OLS model results for each cross section (e.g., year).

2. Create a table showing expected vs. actual sign and significance

for each variable in each year (see attached).

3. Run the White test for heteroscedasticity for each model.

Evaluate the Ho.

B. Estimate the OLS panel model.

[Place all relevant EViews output after each question, the

answer the question]

1. Display the correlation coefficients of the residuals between cross

sections (e.g., states, years, etc.)

2. Has the model improved in terms of signs and significance of the

explanatory variables?

3. Now run the model with "fixed effects" and White-corrected

standard errors. Has the model improved in terms of signs and
significance of the explanatory variables?

11
C. Estimate the SUR panel model.

[Place all relevant EViews output after each question, the

answer the question]

1. Has the model improved in terms of signs and significance of the

explanatory variables?

2. Move all X's into the "Cross-section specific coefficients" box and
estimate the model. Evaluate the results.

12