6.13. Consider the following regression:* SPI; = -17.8 + 33.2 Gini, se = (4.9) (11.8) r² = 0.16 Where SPI = index of sociopolitical instability, average for 1960–1985, and Gini Gini coefficient for 1975 or the closest available year within the range of 1970-1980. The sample consist of 40 countries. The Gini coefficient is a measure of income inequality and it lies between 0 and 1. The closer it is to 0, the greater the income equality, and the closer it is to 1, the greater the income inequality. = a. How do you interpret this regression? b. Suppose the Gini coefficient increases from 0.25 to 0.55. By how much does SPI go up? What does that mean in practice? c. Is the estimated slope coefficient statistically significant at the 5% level? Show the necessary calculations. d. Based on the preceding regression, can you argue that countries with greater in- come inequality are politically unstable?
6.13. Consider the following regression:* SPI; = -17.8 + 33.2 Gini, se = (4.9) (11.8) r² = 0.16 Where SPI = index of sociopolitical instability, average for 1960–1985, and Gini Gini coefficient for 1975 or the closest available year within the range of 1970-1980. The sample consist of 40 countries. The Gini coefficient is a measure of income inequality and it lies between 0 and 1. The closer it is to 0, the greater the income equality, and the closer it is to 1, the greater the income inequality. = a. How do you interpret this regression? b. Suppose the Gini coefficient increases from 0.25 to 0.55. By how much does SPI go up? What does that mean in practice? c. Is the estimated slope coefficient statistically significant at the 5% level? Show the necessary calculations. d. Based on the preceding regression, can you argue that countries with greater in- come inequality are politically unstable?
Chapter4: Linear Functions
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Transcribed Image Text:6.13. Consider the following regression:*
SPI;
=
=
-17.8 +33.2 Gini;
r² = 0.16
Where SPI
index of sociopolitical instability, average for 1960-1985, and Gini
Gini coefficient for 1975 or the closest available year within the range of 1970-1980.
The sample consist of 40 countries.
se= (4.9) (11.8)
=
The Gini coefficient is a measure of income inequality and it lies between 0 and 1.
The closer it is to 0, the greater the income equality, and the closer it is to 1, the
greater the income inequality.
a. How do you interpret this regression?
b. Suppose the Gini coefficient increases from 0.25 to 0.55. By how much does SPI
go up? What does that mean in practice?
c. Is the estimated slope coefficient statistically significant at the 5% level? Show the
necessary calculations.
d. Based on the preceding regression, can you argue that countries with greater in-
come inequality are politically unstable?
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