In an essay, what is the marginal effect of the age of wine on
price based on the estimation outputs (1)-(4) given below. Support your answer by a thorough
discussion of the advantages and disadvantages of the estimated models and the applied sequential
modelling procedure.
compare outputs (1) and (2) and comment on what mistake would the researcher commit by
not including the interaction term Italy x age in equation (1);
– analyse the estimation outputs (1)-(4) to explain which one is your preferred specification;
explain your choice by comparing the statistical characteristics of these models as well as
their economic interpretation; comment on what other test(s) could be performed further that
would help in improving the reliability of models’ estimation;
– use your preferred model specification selected from (1)-(4) to explain whether its functional
form requires improvement and, if so, explain why do you think so and what variables you
would add to it;
– criticise or justify the approach of adding more variables to the model that has been initially
chosen by a researcher (that is estimating model (1) in the first instance and then adding
more and more variables sequentially);
– use your preferred model specification to decide whether it allows advising a wine investor
who looks for a profit in a long-run to invest in Italian or Spanish wines. compare outputs (1) and (2) and comment on what mistake would the researcher commit by
not including the interaction term Italy x age in equation (1);
– analyse the estimation outputs (1)-(4) to explain which one is your preferred specification;
explain your choice by comparing the statistical characteristics of these models as well as
their economic interpretation; comment on what other test(s) could be performed further that
would help in improving the reliability of models’ estimation;
– use your preferred model specification selected from (1)-(4) to explain whether its functional
form requires improvement and, if so, explain why do you think so and what variables you
would add to it;
– criticise or justify the approach of adding more variables to the model that has been initially
chosen by a researcher (that is estimating model (1) in the first instance and then adding
more and more variables sequentially);
– use your preferred model specification to decide whether it allows advising a wine investor
who looks for a profit in a long-run to invest in Italian or Spanish wines.
The modelling procedure and estimated outputs are presented belowThe modelling procedure and estimated outputs are presented in the uploaded files.
