#### Description of this paper

##### Econometrics question

**Description**

solution

**Question**

Question;Econometrics question. You will need STATA to answer this question.A data set on basketball players (attached) is provided. In this data set we need to investigate how the salaries of the major league basketball players are determined. The variable definitions in the data set are as follows. The last six variablesare dummy variables signifying positions of the player in the field.salary: 1993 season salaryyears: years in major leaguesgamesyr: games per year in leaguebavg: career batting averagehrunsyr: home runs per yearrbisyr: career runs batted in per yearrunsyr: runs scored per yearfldperc: career fielding percentageallstar: percentage of years an all?starfrstbase: =1 if first basescndbase: =1 if second basethrdbase: =1 if third baseshrtstop: =1 if shortstopoutfield: =1 if outfieldcatcher: =1 if catchera. Run an OLS using the following population model and report the estimated equationwith standard errors in parenthesis and R2.Population model: http://i.imgur.com/tHfVQax.pngb. State clearly, which position you had to use in (a) as the reference category.c. Interpret the coefficients associated with bavg and shrtstop.d. Test using the p?value approach, the null hypothesis that catchers and outfielders earn, on average, the same amount, all else equal. Show all your work.e. Test at 5 percent level, that there is no difference in average salary across positions. (Hint: this is a subset test).f. Find the correlation matrix of the explanatory variables and comment on the possible multicollinearity problem in the data. Use VIF command in STATA to check if multicollinearity is an issue.

Paper#55600 | Written in 18-Jul-2015

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