Set up a standard Cobb-Douglas model for the value-added. Check whether errors are homoskedastic; use the Breusch-Pagan test for that

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The file contains a cross-section of accounting data from Hungarian firms.

You can also use the PFTRAN.INP script file from the other data folder, if you want to. 

Copy all relevant results (Edit; Copy as RTF in Gretl result window and their interpretation into this file. When you finished your work: save your work as a doc file, keeping your Neptun code as the file name, and submit your results to the ASSIGNMENT task in Neptun. 

Variables are:

y is value-added in million forints;

k is capital: fixed assets in million forints;

l is labour: number of people employed, full time equivalent;

foreign1: ownership indicator for majority foreign owners.

You will have to take the logarithm of the variables y, k, and l for your work. 

Set up a standard Cobb-Douglas model for the value-added. Check whether errors are homoskedastic; use the Breusch-Pagan test for that. If so: re-estimate the model with robust standard errors.

 Compute the returns to scale. Do you have constant returns to scale? If not: is it increasing, or decreasing? 

Are foreign companies different? Test for a break! Also, save the residuals. Treat residuals as total factor productivity. Test, if the mean productivity of foreign owned firms is the same as those with majority domestic owner. Are they different? If they are: which group of firms is more productive? 

Estimate a translog production function for the value-added. Compare it to the Cobb--Douglas model. Which one do you prefer, and why?

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