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# Formulate a hypothesis regarding the relationship between three or more economic variables

INSTRUCTIONS TO CANDIDATES

1. Formulate a hypothesis regarding the relationship between three or more economic variables. When you formulate your hypothesis, think seriously about what you have learned in your economic theory classes.

2. Plot the data that you will use in your regression and use the graphs to suggest a functional form (e.g., linear, log-linear, or quadratic).

3. Summarize descriptive statistics analysis.

4. Estimate the coefficients.

5. Plot the residuals. Are the residuals consistent with the assumptions of classical regression? If not, can you modify the model so that the residuals are consistent with the assumptions?

6. Conduct hypothesis tests.

7. Write a five to six page paper. The format of the paper can be either a short paper or a memorandum. The paper should include: a. A description of the issue that you are analyzing. b. State the hypothesis that is being tested.

d. Report the results from your hypothesis test. Include at least one hypothesis test where you are testing if two or more variables, but not all slope coefficients, are equal to some value (e.g., zero).

e. Discuss the implications of your results. What are the policy implications of your research?

8. Use a grammar utility program to check your sentence structure and spelling.

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