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Introduction to Econometrics 3rd Edition by James Stock, Mark Watson
Edition 3ISBN: 978-9352863501Introduction to Econometrics 3rd Edition by James Stock, Mark Watson
Edition 3ISBN: 978-9352863501 Exercise 8
Repeat Exercise using the logit model in Equation (11.10). Are the logit and probit results similar Explain.
Exercise
Use the estimated probit model in Equation (11.8) to answer the following questions:
a. A black mortgage applicant has a P/I ratio of 0.35. What is the probability that his application will be denied
b. Suppose that the applicant reduced this ratio to 0.30. What effect would this have on his probability of being denied a mortgage
c. Repeat (a) and (b) for a white applicant.
d. Does the marginal effect of the P/I ratio on the probability of mortgage denial depend on race Explain.
Exercise
Use the estimated probit model in Equation (11.8) to answer the following questions:
a. A black mortgage applicant has a P/I ratio of 0.35. What is the probability that his application will be denied
b. Suppose that the applicant reduced this ratio to 0.30. What effect would this have on his probability of being denied a mortgage
c. Repeat (a) and (b) for a white applicant.
d. Does the marginal effect of the P/I ratio on the probability of mortgage denial depend on race Explain.
Explanation
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a) The probit regression for having a lo...
Introduction to Econometrics 3rd Edition by James Stock, Mark Watson
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