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# Present the theoretical form that expresses both of the above relationships.

INSTRUCTIONS TO CANDIDATES

For the following questions, download the file “midterm elections”.  These cross-section data series include observations for the 19 midterm elections that occurred every four years between 1946 to 2018:

netchange  = net change in house seats for the president's political party

gallup10     = Gallup presidentialapproval rating for poll taken in October of midterm election

year

pgas           = Average percentage change in the CPI from year prior to the election year

Q1. Copy and paste the above 3 variables into an Eviews file and show on a new Excel sheet.

Q2. Show a scatter diagram where gallup10 explains netchange and another scatter diagram where pgas explains netchange.  Show a trendline on both of these scatter diagrams.  Interpret your results.

Q3. Use the appropriate econometric measure to precisely measure whether the absolute value of the correlation between gallup10 and netchange is stronger or weaker than that between pgas and netchange.  Interpret.

Q4. Present the theoretical form that expresses both of the above relationships.

Q5. What proportion of the variation in netchange is explained by gallup10 versus pgas?

Q6. Show a representation of the above two regression equations with the appropriate notation that indicates the significance levels of the independent variables.

Q7. Show or highlight the election numbers where gallup10 did the best and worst job in explaining netchange.

Q8. Show or highlight the election numbers where pgas did the best and worst job in explaining netchange.

Q9.  Use the above regression results to compare the average actual values of netchange and average fitted values of netchange for the 5 highest and 5 lowest actual netchange levels.  Interpret your results.

Save it in Excel and submit the spreadsheet

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