A researcher is interested in estimating the supply function of an online car rental service provider as a function of its average price (Price, measured by the averageper kilometre price charged for the month of October, 2017). He has data on the price charged and the number of cars available on the road for rent, (Car), for the 200cities in the U.S. in which the provider operates. However, given that there is simultaneous causality between Price and Car due to the interactions between demandand supply, the supply function cannot be estimated consistently by an OLS regression of Car on Price. He, therefore, uses Income (measured by the per capita GDPof a given city in the U.S. for 2017) as an instrument which satisfies the two conditions of instrument validity. He uses the two stage least squares (TSLS) estimator ofthe coefficient on Price which enables him to estimate the supply function.Suppose, the sample covariance between Car and Income, SCar, Income is 1.45, and the sample covariance between Price and Income, Sincome, Price is 2.45.A TSLSLet B1 be the population slope coefficient on price and Bibe the two stage least squares (TSLS) estimator of B1.TSLSThe value of ß,will be(Round your answer to two decimal places).

Given information: The response variable is price. The predictor variables are car and income.

Answered: A researcher is interested in…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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