a) Using an appropriate set of STATA commands, estimate this model, and then copy and paste the output into your assignment. Be sure to include ALL of your STATA commands in this output.
b) Using STATA, compute the correlation matrix for the explanatory variables, and then cut and paste this correlation matrix into your assignment.
c) Using STATA to run the relevant regressions, calculate the VIFs for this model using the steps outlined on p. 234, together with the formula in equation (8.16).
d) Using Klein’s Rule of Thumb (discussed in footnote 6 on p. 235), do any of the đť‘… 2 values from the auxiliary regressions run in part c) suggest the presence of multicollinearity? Explain. 2
e) Check your answers to part c), by using the STATA vif post-estimation command. Be sure to copy and paste the relevant output into your assignment.
f) Review your answers to parts a), b), c), d), and e), and then draw an overall conclusion as to whether there is any evidence of a multicollinearity issue in the model. Explain.
g) Can you suggest a remedy for the multicollinearity issue, if any, in this model? Explain.
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