Use a Chow test to know if one could split the sample by altitude at the 5% confidence level.

INSTRUCTIONS TO CANDIDATES

ANSWER ALL QUESTIONS

a- Run the following model, report the estimated coefficients, the associated p-values as well as the adjusted R squared in a table

b- Interpret the significant coefficients (at 5% level).

c- Use a Chow test (of overall structural instability) to know if one could split the sample by altitude (high- vs low-elevated counties) at the 5% confidence level. Report the Chow test results and interpret them.

d- Would your conclusions change at the 10% confidence level?

e- Run a test of local structural instability through model (2) below. Report what variable(s) display a significantly different marginal effect in the group of low-elevated counties vs. the group of high-elevated counties (use the latter as the benchmark).

f- Use an ANOVA test to find out if model (2) outperforms model (1). Present your results and conclusions.

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