Question

The following model can be used to study whether campaign expenditures affect election outcomes: voteA = β0 + β1log(expendA) + β2log(expendB) + β3prtystrA + u where voteA is the percentage of the vote received by Candidate A, expendA and expendB are campaign expenditures by Candidates A and B, and prtystrA is a measure of party strength for Candidate A (the percentage of the most recent presidential vote that went to A0s party). (i) What is the interpretation of β1? (ii) In terms of the parameters, state the null hypothesis that a 1% increase in A0s expenditures is offset by a 1% increase in B0s expenditures

Answer 1

Answer:

(i) It represents change in expenditure by candidates A; (ii) $H_0:\beta_1+\beta_2=0$

Step-by-step explanation: